IFPA Takes on Tech

Vonnie Estes, PMA:
Welcome to PMA takes on technology. The podcast that explores the problems, solutions, people and ideas that are shaping the future of the produce industry. I'm your host, Vonnie Estes, vice president of technology for the Produce Marketing Association. And I've spent years in the agtech sector. So I can attest, it's hard to navigate this ever changing world and developing and adopting new solutions to industry problems. Thanks for joining us and for allowing us to serve as your guide to the new world of produce and technology. My goal of the podcast is to outline a problem in the produce industry and then discuss several possible solutions that can be deployed today. Stout Industrial Technology collaborates with customers to build and launch industrial technology solutions that are designed to last. The smart cultivator combines a proprietary agriculturally proven mechanical platform with Stout True Vision technology to eliminate weeds and cultivate ground in a single pass. Visit stoutagtech.com. That's S-T-O-U-T-A-G-T-E-C-H.com to learn more.

Vonnie Estes, PMA:
Welcome to this episode on agtech in Israel. I've been doing these episodes based in different regions. I've done them for Brazil, South Africa, Australia and last week, Singapore. It varies how difficult it is to get the right people on Zoom and produce an episode. It mostly depends on my relationship with people. If I don't know people very well or at all, it can take up to three months to get three to four speakers. Well, Israel broke the mold on that. I know a few of the speakers from prior work and they got back to me right away and everyone had a suggestion of other people who should be on the podcast. So suddenly I had eight people. Unless you are Tim Ferriss, no one is going to sit through a two hour podcast. So I decided to do two episodes on Israel.

Vonnie Estes, PMA:
I think this can be attributed to both the amount of agtech coming out of Israel, that everyone knows everyone else due to the size of the country and just how outgoing and willing to talk people are in Israeli agtech. So get ready for an exciting episode about an exciting region. Israel has long been famous for growing food in the desert and inventing cherry tomatoes. Its current agricultural achievements are no less than precedent. And dozens of innovative agtech and now food tech startups are developing innovative solutions for the world. Precisely because Israel is a small country with relatively few natural resources of its own it has stressed the development of forward thinking highly advanced agricultural solutions. In this episode, we will hear from a great variety of experience and technologies.

Vonnie Estes, PMA:
First, Oded Distel will talk about his time at the Ministry of the Economy and Industry and also his new startup with a solution for water shortages. Oded gives a great overview of how government helps the growth and success of the agtech sector in Israel. We will also hear from Ohad Zuckerman, managing director at COPIA Agro and Food Technologies Fund. After Ohad, we will hear from two companies with great solutions for the produce industry. So let's get started with the conversations. We have with us Oded, and I want to talk to you about your company. But also I want to talk to you about your time with the Ministry of Economy and Industry. So you got a very long career both on the commercial side and also on the government side so you're uniquely positioned to talk about what's happened in Israel in technology and in agriculture. So why don't you start just telling us a little bit about yourself and your background?

Oded Distel, Tal-Ya Agriculture Solutions:
Sure. So first, pleasure being here with you here today. I'm a follower of the podcast and a great pleasure to be talking to you today. So as you said, I had a long career in the Israeli government, seeing things from a macro point of view, looking at the industries, water industry, the agro industry from that perspective. And recently about a year and a half ago I left the government after 23 years there, moved to the private sector and I'm the CEO now of a Tal-Ya, small agro company. The transition is fascinating, looking at things from a totally different point of view now. And I like it, makes my life interesting.

Vonnie Estes, PMA:
Great. Yeah, that is different. The different types of things that are necessary to run a commercial company. So in this episode I'm focusing on agro technology development in Israel and how the ecosystem has evolved. From your background it looks like you've had a big hand in developing ecosystem through bringing foreign investors and support from the multinationals. So please talk to us about your work at the Ministry and how that's helped agtech.

Oded Distel, Tal-Ya Agriculture Solutions:
Yeah, so when you talk about the technology, so what you really think about the tech side. You serve good stuff, algorithms, automation, and on and on and on. And usually people ignore the fact that in order to bring a technology to full implementation to the market, it takes a huge effort from the entire ecosystem to work together and to want to make it happen. And the ecosystem concept means that we work together with all the different players, the government, the regulators, the investors, the academia, startups, NGOs, obviously farmers, water, utilities and on and on, and try to bridge the gaps between all those different players, which is a relatively a very tough challenge. In Israel we have a lot of things that play in our favor. One obviously, the place is small.

Vonnie Estes, PMA:
Yeah.

Oded Distel, Tal-Ya Agriculture Solutions:
So it's really easy to get around and to interact and to meet the people almost on a daily basis. If my office was in Jerusalem, at the ministry, but I could be there in the morning and then go to Tel Aviv for a meeting and end up in Jerusalem back in the evening for a meet up. And same goes with Beersheba and Haifa, and the entire country is in a distance of a few hours of driving. Which means that you are able at the end of the day to say, okay, I know the ecosystem, meaning I know the people, not something theoretically.

Vonnie Estes, PMA:
Yeah.

Oded Distel, Tal-Ya Agriculture Solutions:
I have everybody on my iPhone. It's figured out to almost all the CEOs of the companies and the main researchers in the academia, and I can ask questions and get answers immediately and connect the dots in no time. Which I think is pretty different to a large country like the US or even a medium sized country or relatively big compared to Israel like Italy or France or whatever. Second is the local culture in Israel, which a people tend to interact a lot. Relatively warm open culture and we have a lot of opportunities to interact as well. So there is the army service that everybody mingles together, university. So the ability to bridge those gaps between the groups is much easier in Israel compared to other places.

Oded Distel, Tal-Ya Agriculture Solutions:
And eventually the fact that we didn't have any other choice. We had to come up with solutions to those challenges because we simply could not do otherwise. So we had to come up to solutions to water challenges, we had to grow food in the desert, we had to come up with processes that would allow us to do much more with less resources. So all those combinations together created a very dynamic society and culture that pushes forward on those concepts of fair innovation, of fair thinking out of the box, of trying to do something fail and try again until you make it. So I would say the combination of all those elements together created this interesting place that brings a lot of innovation in agriculture, in water, in medical, in cyber, in whatever.

Vonnie Estes, PMA:
So a lot of the things that are developed in Israel, like you said, it is a small country and you do have a lot of agriculture there but it's not a big country. So when companies are formed, do they form with the idea that they're going to need to go global, that they'll need to be global companies? Is that in the thinking of the formation?

Oded Distel, Tal-Ya Agriculture Solutions:
Sure, from day one. And sometimes people exaggerate because they start a company and the two founders would argue if they want to go IPO in Chile and in London. They didn't do anything yet, but they find something to argue about. So the answer to that is definitely yes. Everybody looks at the local market as a testbed, as a final place, play around in the sandbox and at a very relatively very early stage, move globally. Obviously, the fact that the world is so close now, even the time of corona, you could be in a conference in the morning in India and then end up in somewhere in Chile afterwards with Zoom call. And it's quite a common in Israeli culture for some time now to be very globally, to interact with the different cultures, languages, people from all over the world. So the long answer to say, big yes.

Vonnie Estes, PMA:
And with the financing, I mean, I know a number of the agtech VC companies that are here in the States have made investments in Israeli companies even very early stage. And is that normal? Does the financing often come from outside the country or do you have a lot of venture capitalists and private money that goes into companies in Israel or both?

Oded Distel, Tal-Ya Agriculture Solutions:
So the VC industry in Israel started somewhere in the '90s. It's a very interesting story because it's one of those cases where the government did something positive.

Vonnie Estes, PMA:
Yay.

Oded Distel, Tal-Ya Agriculture Solutions:
Yeah. And we keep coming back to this story, is very happy with it. So somewhere in the early '90s the government identified that there're a lot of startups and entrepreneurs. And that the lack of financial resources is the main obstacle that prevent them from growing. And the government initiated a program where it said, that the private sector we'll put a bucket of money, you put a bucket of money, you manage the investment and in some time we the government will give you the private sector the option to buy us out, buy them out. And then the startup. So in the beginning, five small VCs that were a partially owned by the government but the private sector was the one to manage it. To make the long story short, it was a huge success. At a certain point the private sector bought out the government and the VC industry went on from that point, going very fast forward.

Oded Distel, Tal-Ya Agriculture Solutions:
So at the presence the VC industry in Israel is local VCs, foreign VC is represented in Israel, Israeli VCs that raise money from abroad, mostly US, Canada but recently also a lot of money is coming from Asia, China, India, Japan, et cetera. And obviously the recent trend is a lot of interest from the Gulf, from the United Arab Emirates that we see and also Europe, not to forget Europe. So it's a very competitive, interesting market. And you'll hear different things. From the point of view of the startups, you'll hear that the VCs are very conservative and they don't take risk and they don't invest enough and they just look for the easy investments and they don't go to very early stage, et cetera. From the VC side you'll hear, not enough options, not enough companies and on and on. But I assume it's the same discussion you hear in the Silicon Valley and you hear in London and in all those centers of innovation. And usually it's a game. Sometimes you have a lot of a competition over the money and sometimes the money is competing over full startups.

Vonnie Estes, PMA:
Interesting. So what do you think that the ecosystem needs to continue and grow and prosper in Israel? Is there anything, it sounds like you got money coming in from a lot of different places, you've got government support, is there anything missing or anything you'd like to see different to keep things growing as fast as it has been?

Oded Distel, Tal-Ya Agriculture Solutions:
So, the government also has an important role. And the government has to interfere, not interfere, but to be a partner where I would say the other different players would see a more narrow point of view, more narrow angle. And the government has to have a broader perspective of things. And in a way this is what I did when I was in the ministry, we have created or we have fostered this ecosystem around the water technologies. And the same concept was then implemented in other sectors including agriculture. So I'm a very strong advocate for this concept of working in ecosystem and providing the opportunities for the entrepreneurs to interact with regulators. And it is fascinating because you realize that they speak different languages.

Vonnie Estes, PMA:
Mm-hmm (affirmative). They can end up talking past each other, right?

Oded Distel, Tal-Ya Agriculture Solutions:
Amazing, amazing. We have a meter and we called it regulator on the bar. We brought the important regulators from the water authority, from the Ministry of Health, Minister of Environment, to meet Israeli water startups. And at a certain point I realized that I need to interfere and translate the language to the regulator and the language of the entrepreneurs because they did not speak the same language. Obviously they speak Hebrew, but it was not the same language.

Vonnie Estes, PMA:
Yeah.

Oded Distel, Tal-Ya Agriculture Solutions:
So if you give the regulator the only opportunity to meet a startup when they have to take a very bold decision to allow a new cool technology to enter the market, and they have tons of responsibility on their shoulders and they have to take it upon themselves, the chances that they're going to be strong enough to take a courageous decision is not big. But if they have met the entrepreneur a year before and they have interacted with him, and maybe they went to see a small pilot that the guy had in the university and they've built confidence and they've built a trust relation, the chances that at a certain point this guy might say, okay, I feel that I'm on the safe ground. I can take a little bit more risks with this technology, is much greater. And in a way this is the idea.

Oded Distel, Tal-Ya Agriculture Solutions:
Same goes with investors and with NGOs, to be able to connect all those players. And going back to your question, what is in a way missing now? So the fact that so many sectors are now competing over specific capabilities or specific talents, it has to do a lot with data and data scientific enom, makes those people being torn in different sectors. The financial sector wants them at the health sector, agriculture, transportation, energy and on and on. So the idea is how do we open the door and let a lot of new talent and people from other sectors that were not yet in the game until recently. In the Israeli case it would be the Arab community in the ultra orthodox, and let those guys come in and play in this wonderful field that we all like so much.

Vonnie Estes, PMA:
Yeah, I think that's true for the United States as well. Is that sometimes agriculture isn't the most exciting in people's minds if they didn't grow up around it. And so, how do you get talent both people who live in the US and how do we bring people from other places? Because we have a shortage of that talent as well because there's so much need in the area. So let's switch a little bit to your company. And as you've mentioned several times, water scarcity is a very big issue in Israel and becoming more so worldwide. And so what attracted you to go into the private sector and tell us about the company and your product?

Oded Distel, Tal-Ya Agriculture Solutions:
So after 23 years in the government, which was fascinating, right. As I told you, I did something that I felt like I had a startup inside the government, which is totally a crazy thing. But it was really inspiring and challenging and very interesting. True. And then at a certain point I said, okay, enough, I want to do something different, I want to do something totally different. And then from my position I knew almost everybody in the water, in agriculture, in energy. And there was this small company that I knew for some years that I was totally in love with the technology. And it was still at the stage where it was a big promise, but did not yet deliver. And then I said, okay, this is the mission. This is something I want to take forward, to take a very small company with a very simple technology. I mean, Tal-Ya, what we do, we create ideal microclimate to the root zone of young trees. And by the way, the product we call it Mitra, which is wound in Greek.

Vonnie Estes, PMA:
Wow.

Oded Distel, Tal-Ya Agriculture Solutions:
Yeah. And this is the way and this is exactly the way we look at what we do to those a very young trees. We are like a mother taking care of very young babies. So the challenge here is, the technology works. Agronomically we know it works, we tested it. And the beauty of it is that it works in a holistic way. It saves water, it prevent weeds, it mitigates extreme weather conditions, it protects the soil, it takes care of soil health, soil erosion, and on and on. So we're doing all this beautiful staff in an extreme extremely simple way because we work with nature or nature works with us, it's a partnership. So this is the journey that I choose to take after leaving the government. So from this huge big very bureaucratic monstrous organization, all the way to something extremely small. Yeah, and this is a challenge and I love it.

Vonnie Estes, PMA:
It's fascinating. I looked on your website and there's a video that shows. And it's very infrequent that you see a video that really without words it completely explains the product and how it works. And so that's really well done and really shows what the product can do. What geographies are you in right now and kind of what's the state of rolling this product out?

Oded Distel, Tal-Ya Agriculture Solutions:
Great. So in agriculture as you know made better than myself, things takes time. So it is a slow process to introduce a new product to the market. So we are working in India, and in India we have collaboration and partnership with their very strong local players. So it is a Tata Trust and Tata Coffee and Syngenta Foundation. And those organizations are aiming at improving dramatically the smallholders segment and increase their income. And because Tal-Ya and the Mitras are a very modern, meaning we can be implemented in an extremely large orchard in California or Australia. And we are totally relevant for a small holder with maybe one acre behind his house. So, we work in India and we had some extremely nice pilots there drawing tomatoes and some kind of Hanuka zucchini, Indian zucchini, with wonderful results and we're now moving to the next stage. We have a very nice pilot in New Mexico with the New Mexico State University with-

Vonnie Estes, PMA:
That's where I went to school.

Oded Distel, Tal-Ya Agriculture Solutions:
Nice. Wonderful people and such a joy working with them. Professor Manoj Shukla is running the spiral. So it is with the countries and we learned that the pecans are a great place in the local economy in New Mexico and at the same time they have a very serious issue with water shortage.

Vonnie Estes, PMA:
Mm-hmm (affirmative).

Oded Distel, Tal-Ya Agriculture Solutions:
Take a lot of water. So the promise that we make is very attractive. The only problem again, it's going to take time to get results. So there's New Mexico, we are working in Mexico and in Australia with wine yards. So yeah, different geographics. We are looking for the situations stuff. Where things are tough, then our contribution is significant.

Vonnie Estes, PMA:
Great to hear that broad perspective of what is happening in Israel. Now we will move to hear how investing is working in Israel at COPIA Agro and Food Technologies Fund with Ohad Zuckerman. COPIA invests in agricultural and food technology projects in Israeli R&D institutes and by hands on management and in cooperation with strategic partners that bring them to maturity. COPIA has several interesting business models on getting technology to market quickly and less costly. Ohad has a great background in management and international business with a long career in ag and food which gives him a great eye as to what they should invest in and develop. Please tell us about yourself, your background and COPIA Agro and Food Technologies Fund.

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
Sure. So I'm 57 soon in July. And COPIA is my third career. I started working in a family company, seed family company that my father founded back in the '50s. It's called the Zeraim Gedera. It was actually purchased, acquired first by a fund, a private equity fund in Israel and then by Syngenta. It's now part of Syngenta. Then I moved to aquaculture. And I initiated a company that deals with micro algae. Today the company has a face mask for micro algae and it's starting to do all the commercialization. And COPIA is my third and hopefully last career. This is really an amazing fund. We have a great achievement so far. I meet amazing people every day. I'm an agronomist by profession and I have a business degree, a joint degree from Tel Aviv University and the Kellogg School of Business from Northwestern. And actually these two things of agriculture and food and business come together in COPIA. And the good thing about COPIA is that it's not just making money, it's really an impact funded to also try to do something good with the money.

Vonnie Estes, PMA:
So what is being an impact fund mean to you? How do you act differently than if you weren't an impact fund and how does that color your investments and how you look at different businesses?

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
Okay. So first of all, COPIA invest in agriculture and food technologies that do something good to the food supply chain, from the genetics to the plate. We're trying to improve the sustainability by mitigation of climate change and food safety and food security. And so all our technologies are doing something that either changes from chemicals to biologicals or improving the processes of the food production or improving the shelf life and the quality of food and things like that. And we talk not about the fruits and vegetables, but also livestock welfare for example and about fish production. So we are really involved in all aspects of food. And the impact is really to increase sustainability by replacing a product or enhancing processes and enhancing of course yields and productivity. Another thing as an impact fund, at least I think it's very interesting, doesn't need to do anything with technologies. We invest in two main avenues.

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
The main avenue that we invest in is in technologies originating from Israeli research organizations and universities. We find technologies that have passed the proof of concept stage, we teamed up with companies from the relevant verticals and we transform these technologies into products that could be sold or process that could implement and improve sustainability. And of course, this is done in a very serious way. We create a team between us, the research team and the research organization or university and the company that is doing the development and commercialization later on. So we finance the research part, the companies do the income investment by funding all the development of commercialization. In addition to that we also invest in startups. And the startups are all more into development than research, but they complete our portfolio. So that's one thing that we do from the impact point of view.

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
Another thing which is very interesting, if you look at the technologies in which we invest in research institutions, about 60, 65% of the technologies are led by women researchers. However when you go to the startup world is completely ruled by men, 99%. So people talk about gender equality, and this is something that I personally believe that gender equality in life will come from gender equality in business. So this is already now the second year that COPIA initiate and manages a competition for women entrepreneurs in agriculture and food. And the second competition is going to take place on June 6th, it's going to be live in the internet as well. And I think this is another aspect of the impact that we're trying to do as a fund not only by the technologies in which we invest but also the way that we do business and the way that we promote the industry.

Vonnie Estes, PMA:
I really love hearing that. I'm speaking on a panel in a couple of hours about women in agriculture. So I've been doing some research and just looking at what it looks like in the startup world, this is in the US and it's across all startups, but we're going backwards. 2020 has been a bad year for women in business period. But this year, in 2020 2.3% of the startups funded were women founded down from 2.8%. So we're a little better than 99% men, but not far. And you have to do it on purpose. So I love that you're really paying attention to that. And that's really exciting, that's great. The other thing that struck me in what you said is, the part of pulling technologies out of universities. I think that's really interesting. It's kind of like the flagship model here in the US, flagship pioneering where they look for technologies and they build a team around it. And it's a very different model. Have you found that to be equally successful to the startup entrepreneur model or it's just a whole different model?

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
I think it's much more efficient because if you're a startup and you want to establish a company, you invest huge amounts of money, millions of dollars including the team, getting laboratories, making trials, doing formulations, go to registration, all these things they cost a huge amount of money. If you go to our model, the research is done by the institutions that are very well equipped and they have amazing teams there. The development and commercialization is done by companies. That they've all the facilities, all the know how, all the market knowledge and they do the other part of the equation. So if you're able to connect these two and to create the fluent process, then you save huge amounts of money and you're much more efficient. Because the best people in every domain do what they have to know. The researchers do the research, the companies do the development and commercialization and we are doing the connection. Usually these two entities, business and academia do not speak the same language.

Vonnie Estes, PMA:
Yeah.

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
Just to give a simple example, take the issue of IT. Researchers usually are promoted because they publish articles. When they publish, you cannot write a patent. So there is always an issue when to publish, should we publish, what we will republish. And so this is something that always creates tension. If you know how to handle it and you create a win-win business. So we speak both languages, we know how to speak with researchers, we know how to speak with the industry. And we created a smooth process. And we know exactly how to differentiate between R&D to create a very, very coherent process. So basically, it's more efficient both financially and also from the operational point of view. So far we have 26 investments, eight different organizations here in Israel. And in addition to that, we also have two startups. So altogether 28 investments in the fund. So we have six project leaders, people that are industry professional freelancers that work on an hourly basis plus success fee, and they manage clusters of technologies like crop protection, food quality, aquaculture, genetics, et cetera. And they report to us and this way staff control is very well kept and managed. So that's a unique model. We don't really build startups around technologies, but we create cooperation with industry. And we act as a bridge between academia and industry and it works fantastically.

Vonnie Estes, PMA:
Oh, I see. So you're not forming a company necessarily around the technology, but you're bringing the technology to companies that already are involved in that space.

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
Yes and no. We do establish a special purpose company for every technology, which is the vehicle through which we make the investment in the research institution. Or we do the business development with the industrial partners. So there is a special purpose company for every technology and this is the way we manage it.

Vonnie Estes, PMA:
I see, I see. So how do you see, you've been really involved in the agtech ecosystem and just in the time that I've known you, that it certainly has changed and grown. So how do you see the agtech ecosystem has grown in Israel in the last five years?

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
Okay, so first of all we have a lot of startups, much more startups than we had in the last like five years ago. More food technology than agtech. Yes.

Vonnie Estes, PMA:
Yeah, I always end up doing agtech ones, I guess. So I've seen so-

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
Even though we do have enough agtech, there is a lot of food tech and the growth is mainly food tech. And I think that the majority, if not all of them, address the happy and not so hungry world. While the agtech companies do also address both the hungry world and the not hungry world. So from my point of view, first of all, there are many more companies. Second, more funds. And in Israel specifically there is a new vehicle for investment which is called R&D partnerships, which enables institutional investors to invest in public entities that invest in startups. So they do not invest directly in the startups, they invest in the R&D partnership and through this they get involved in the small companies. Because they will not move for 10, $20 million, they will move on for much more than that.

Vonnie Estes, PMA:
Oh.

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
So in addition... Yeah. And in addition to that the last thing is that you see more MNCs, more multinational companies coming to Israel directly. They've representations here, they do scouting here, they invest here and they are doing a lot of good work by helping the startups to focus more on what the industry really needs. So these are the main four things that I can tell you that happen. More companies, more investment vehicles and more MNCs and of course, the partnerships which is the new thing.

Vonnie Estes, PMA:
So what technologies in the agtech side do you see that are the most interesting and promising right now?

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
Well, I think that there are a lot of things that are going on. I cannot tell you on one thing which is specific because usually these are trends.

Vonnie Estes, PMA:
Yeah.

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
And it's difficult to talk about trends. Because you listen to the same interview two, three, four years down the road, maybe what you hear is old fashioned already. So I think that I would like to address something which is from our point of view with the fund that deals with a lot of projects and technologies is important. When we go to change from chemical to biologicals products. Okay, let's talk about for example, crop protection or enhancement of quality of fruits and vegetables, things like that. Then we come into the issue of formulations. And the formulations are something that the big companies usually used to do. And slowly, slowly, when the startup started to go into the business, then they found they need to do it. And today you have companies that specialize in formulations. This is something that is really missing in the industry. The expertise of creating new formulations for bio materials, I think this is very important. So that's one thing that I would like to point out. However if you talk about trends, I would say that in food it's all the protein substitutes, both plant based or the cultured meat.

Vonnie Estes, PMA:
Mm-hmm (affirmative).

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
And when you speak about agriculture is precision agriculture. So we talk about the protein substitute, I think that the plant based easier. Okay. And it's a matter of taste and honesty whether you think it's the same or not. That's one thing. The second thing is the cultured meat, it will take time. However, I think it's important. Nevertheless, until it's there and commercially available and affordable, people still need to look at the real meat producers and not neglect them. I think it is important. Even though we're impact funded, we look in the environment. Still, there is a world that we need to feed and it will take time until the real meat substitutes like cultured meat will be affordable and commercially available for everybody. So regarding agriculture, I think that precision agriculture is a buzzword. And here, again, I've got some things to say. I think that it's really nice to see the way that high tech comes into agtech.

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
However, I met many, many companies and each one tells me that they will increase the yield by 15 to 20%. So let's take two or three like that or let's even take five, so the two plants will have to bear more and more and more fruits because if each one is right then it's going to multiply the fruit. So it's ridiculous, it's impossible that everyone will do that same, the same time. So first of all, it's very difficult to measure the incremental real contribution of every technology. That's one. Second, due to that it's very difficult to create a business model that is real and affordable to the grower and also good enough for the company. And the third thing is, think about the food grower that gets 20 notices to his cell phone from wanting irrigation, wanting fertilization, wanting crop protection, wanting like this and wanting like that, and he doesn't know what to do.

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
So eventually I think that all three, maximum four players will be the ones that will purchase the best of breed from each one and unite them into one solution. And they integrate the knowledge and understanding and will come with a daily recommendation or a periodical recommendation to the grower. And this will take time. But I think this is where the industry will go. So as investors, we're very careful and we're looking at this. And we still didn't find the one that really can unite all the inputs from all their small startups that everyone has a wonderful solution. And we cannot still know how to measure precisely and to write business model for them. So I say, I think that people are rushing into it without giving enough thought to it. But certainly, it will happen, it's there. And I believe that eventually there will be three to four major supplier of these technologies altogether to the farm.

Vonnie Estes, PMA:
Yeah, of course we're seeing the same thing in the US too. It's just you can see a grower with 15 different dashboards and none of them speak to each other. And it's really difficult to really act on those decisions when everything's coming in separately like that. So I think it's really important that we find some platforms that support all these different tools.

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
Just to tell you one thing, I think that if you look at our portfolio there are a few things that I think may be interesting to tell you about. First of all, one of our companies is called ToBe, deals with the bees industry. As the bees are disappearing.

Vonnie Estes, PMA:
Mm-hmm (affirmative).

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
And there is a huge issue with the bees because they're the major pollinator of food crops. The main cause for the disappearance are viruses and certain mites that causes direct damage and also transmits the effect of the viruses into the hives. It's called the varroa mites. And this is the number one problem of the bees industries, the bee industry. And one of our company, ToBe, has a solution to that. And we see this as one of our major contribution in the future to the industry as a whole. That's one. The second one is post boost, which it's a material that enables to enhance the color, the taste and the shelf life of fresh fruits and vegetables. It's sprayed before harvest. It's an amazing material. And the last one which I think is important is grading specialty items. Personal melons, muskmelons, that are going to be a personal size and with edible rinds and with soft seeds so you can eat it as an apple.

Vonnie Estes, PMA:
Oh, I love that.

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
These are things, it's very interesting things for the PMA members. And there are two more technologies more on the production side which I think are interesting. What is called soil fire. It's a replacement of all the chemicals and not so environmental friendly crop protection materials that are used for soil disinfection before sowing and planting. This is an amazing material that doesn't harm the microbiome in the soil but it does kill weeds, noxious weeds, nematodes and fungus. For example, also the Panama disease found in live Fusarium. So this is an amazing a product. Another one is called bird up, it said to break the dormancy of birds of fruit trees. It's an amazing product, less toxic than Dormex, dramatically, not toxic actually. And safer and also does a better job. We have very good trials in the States and in Mexico and we believe this could be a very good product for American, South American growers. So this is just some examples of the things that we have in the fund that are very relevant to the agri food industry.

Vonnie Estes, PMA:
Thank you for that. If people wanted to find out more about the companies, are those listed on your portfolio page on your website?

Ohad Zuckerman, COPIA Agro& Food Technologies Fund:
Yes. I think that super fruiter, the one with the melons is not yet there. But the all the others are there. And one more thing, as investors now but in the past I managed companies and I was working with investors and working in agriculture. I think that it's very important that when people go to raise money, they will have the right team in place. Because investors invest in people, they do not invest in a technology or in a market because technologies can change and markets can change and trends are trends. And it's very important to have a team. So the entrepreneurs usually come on by themselves and we tell them listen, you need to come with a complete team that eventually or at least partial that will show us that you understand what is needed and that you have the right team next to you. Because we do invest in people. Always a good idea with an excellent team will do much better than an excellent idea with a poor team. So as an investor I can tell you that we do invest in people and I hope that there will be more women in the people we invest in.

Vonnie Estes, PMA:
Next, you will hear from two companies in Israel that are using groundbreaking technologies to solve problems in the produce industry. Raviv Kula founder of FruitSpec provides yield estimates as a service based on hyperspectral machine vision technology. And then I will talk to a Elad Mardix, president of Clarifruit, a company addressing food shrink with an automated QC platform. So tell me about yourself in your company, please.

Raviv Kula, Fruit Spec:
So my name is Raviv. I'm a veteran in the high tech industry for the last 22 years, mainly coming from communication, managerial role of product management, product marketing, marketing, sales, business development in the industry. About four and a half years ago, I sat down with a friend of mine for the last 25 years and we talked about hyperspectral technology that we believe that the potential is only scratching the surface of being used. And with this we debated among ourselves what we can do with this technology. And the Neil, my friend and now my co-founder, he's a citrus grower. And he said, look, in the place that we live there are many citrus growers but Shahar, which is the third co-founder and I are keep asking ourselves, how do we know how many foods we will have this year? And we thought of testing the hyperspectral technology to solve this question. And we tried two different technology and failed. But then the third one was weaker. We found the technology, we know how to see green foods at the early stage of the season.

Vonnie Estes, PMA:
How long did that take, those trying the two things and then finding the one that worked. how long did that take?

Raviv Kula, Fruit Spec:
Since we're dealing with fruits you have a season and you have to squeeze everything.

Vonnie Estes, PMA:
That's agriculture.

Raviv Kula, Fruit Spec:
If you want to capture everything you have two months, you don't have much more than that.

Vonnie Estes, PMA:
Yeah.

Raviv Kula, Fruit Spec:
It was about three months, four months. It was very difficult to get the equipment. But then once the third one was successful, I called my wife on my way back and I said, look, we have everything that we need, we're going to win the market. The technology was so profound that we can use it. And this is how we started FruitSpec.

Vonnie Estes, PMA:
That's a great story. So what kind of insights do you give your clients? And you're solving the problem of yield, right? That's what the information that you're getting. And how do you work with clients and how do they get that information?

Raviv Kula, Fruit Spec:
So we started with counting the number of fruits, but then we found out that nobody cares how many fruits they have. They speak about carton, they speak about weight, and not the number of fruits. Of course, the number of fruits is a fundamental component in this equation, but you need to know what the customer needs. And we found out first that the segment that we should target is the packing houses and not the grower because the value that we can bring them is much higher. And then after solving the issue of how many fruits, we found out that this problem of not knowing how many fruits it's actually lead to a much bigger problem of yield management. How do you manage the inventory of the fruits that you have in your orchard? What are the tools that you need in order to do that? And we found out that nobody is doing that.

Raviv Kula, Fruit Spec:
I mean, there are some ERPs in the packing house, but they are doing some invoicing, transportation, shipments and so on. There are some farm management on the other side, they're doing the agronomy side of the business. But nobody is linking the orchard to the marketing. And we form, the marketing name is the food intelligence platform, that we provide yield management to our customers. Meaning, accurate data on how many fruits they have, what is the weight of the fruits, what is the weight going to be by the end of the season. So how many carton per size they will be able to pack from each orchard. And on the aggregated level what they will be able to sell. And we can provide this information in citrus, six to seven months before picking. In apple, stone fruits, three to four months before picking. And this is crucial for the profit and top line for the packing house.

Vonnie Estes, PMA:
And it's a service, right? You don't have to sell anyone equipment, you go into the fields with your own equipment. That's how it works, right?

Raviv Kula, Fruit Spec:
Yes, exactly. In any territory that we're serving, we have a local team that have our systems, have our vehicle and it's a service. So that the customer does not have to bother with buying the system, learning how to operate it and handling everything. We have coming, we scan, we go, the customers see the results through the web portal. It's very transparent, this operation to the customer.

Vonnie Estes, PMA:
And what other crops do you work in addition to citrus?

Raviv Kula, Fruit Spec:
So we're working on citrus, apples, stone fruits, grapes, we have plans to expand this year into, continue with the packing housing to berries and some other food types, but also for tropical fruits. So we have a very innovative solution for bananas yield management, pineapple, papayas. So we are expanding. The technology roughly is the same. I mean, as the same as the pattern that we got. But it is agnostic to any type of fruit. But the implication of how to do that and how to plan forward is something that we have for any fruit type separately. And as I said, we currently targeting for this year to go for bananas and pineapple, tropical fruits, but also expanding what we are doing to polygons, berries and so on.

Vonnie Estes, PMA:
So it sounds like you're working outside of Israel then if you're going into tropical fruits. So what geographies are you in?

Raviv Kula, Fruit Spec:
In Israel at the ethos of Israel is being agriculture, but the country is small and there are not a lot of export coming out of Israel for our fruits So we look at it as a kind of a lab that we can test a lot of things that we are doing. This week we done some cherries and berries over here in Israel. So we can test our equipment, our artificial intelligence models over here. And we have offices in the US, in California, the Central Valley, Chile, two offices in South Africa, one office in Spain, we have a minor operation in China. But this year we are going to expand and open at least two other offices during this year.

Vonnie Estes, PMA:
Wow, that's a very wide spectrum. So this particular episode that I'm talking to people on is to kind of focus on Israel and that the ecosystem is like there and what it's like to do a startup there and the benefits. And so, you live there, that's where you're from. So it makes sense that you would start a company there. But what's the ag ecosystem, the agtech ecosystem like there? And has there been good access to funding? And has it been a good place to start a company?

Raviv Kula, Fruit Spec:
It's an ecosystem, it's not just the system. There are some communities that assist, forming a company knowledge, connection. In Israel it's very wide and people do not hesitate to introduce you to either customer or to high level connections. So it's really, I can call everyday two, three, four, five CEOs for other startups and tell them look, I have a problem over here, how do you solve it? Okay. Either financial or something that is specific to the domain that we are doing, it's very common to do that. So the ecosystem is very open and helpful. The access to funding, it's changing. I mean, from the day that we started the backlog in the end of 2016, which was very difficult and only a few funds or investor were available to invest really in ag space, now it's a much more wider community, investors. And you can see, you can see the forming of big companies. Companies are going into the C and D rounds with 200 people, 500 people in a company. So the industry is maturing step by step.

Vonnie Estes, PMA:
So the most companies that start in Israel, most companies must start with the idea of this is a good place to start but we have to be global for this company to make it. Is that kind of the thinking? Does anyone start and say, I'm an Israeli company and I'm going to serve the Israeli market. Or are most people thinking, I'm going to be broader and be a global company.

Raviv Kula, Fruit Spec:
I think that 100% are looking to be global. I've got customers in the US that have around 10,000 hectares. I mean, in acres it's different. But-

Vonnie Estes, PMA:
Yeah.

Raviv Kula, Fruit Spec:
The overall citrus bearing land in Israel is about 15,000 hectares. So in comparison, you need the customers and you need to prove your technology is working outside of Israel. Investors are looking for the international reference and not just it's working over here in Israel.

Vonnie Estes, PMA:
Mm-hmm (affirmative).

Raviv Kula, Fruit Spec:
I must say that the acceptance from the customer, from the client point of view is quite the same. It's whether that you are a very small packing house or you are a huge packing house, they're always willing to hear what you're saying, understand and test it for sure. Israel is not different from the rest of the world in terms of attitudes towards agtech. The scale is much lower.

Vonnie Estes, PMA:
Yeah, that makes sense. Well, there's such a great education system there and amount of talent. I've worked with a number of companies over the year more on the biology side and agriculture and it's just, the universities are fabulous. And so it's a wonderful breeding ground for sure for these types of companies to then go global.

Elad Mardix:
I'm Elad Mardix. I'm the president of Clarifruit. And together with my two partners, Avi and Ruby, we actually established Clarifruit about three and a half years ago. And just maybe a word about how the idea came up. Clarifruit was born actually primarily through my partner, Avi, was really the product visionary of the company. And he used to work for HP for about 10 years before establishing Clarifruit. And at HP he actually ran on the R&D side, the world's largest automatic testing product for the software world. He's also coming from a farming family background. And in about 2017 he had a very interesting observation. And the observation he had was that software and fresh produce are actually very similar.

Vonnie Estes, PMA:
Oh can't wait to hear how that is.

Elad Mardix:
There you go. If you think about it, both software and fresh produce are merchandise whose quality is changing on a daily basis. It's very unique, as opposed to an iPhone or a chip that's coming out from a foundry and the minute it's being produced the quality is fixed. It's very different for both software as well as fresh produce. Now, 20 years ago HP has invented automatic testing for the software world because they recognize that the supply chain of software distribution was very inefficient and they needed to apply an automatic testing concept to this industry. Avi recognized that actually the fresh produce industry, which as we all know is a very long, complex and inefficient supply chain, will benefit enormously if there was an automatic testing concept applied to that supply chain. And that's really how the idea was born.

Elad Mardix:
Clarifruit had essentially developed an automatic quality control platform for the fresh produce industry. Essentially what it means is, we developed software that has two components. Component number one is a mobile application that you can use on any smartphone that exists today in the market and actually allows you to perform a quality control inspection of your fresh produce in an automatic way through computer vision technology that we have developed and have patents on and some other integration that we have. And even more importantly, we have a web app, a management and analytic dashboard that generates in real time data and insights that really are not available today in any other parts.

Vonnie Estes, PMA:
So you have customers all along the supply chain, can you tell us about your different customers and what problems you're solving for them?

Elad Mardix:
Sure. So first let's start actually, who is our target customer? So if you think about it across the supply chain, from literally the grower down to the front store of the retailer, there are about 10 to 12 points today that people already perform a quality control inspection on a sample basis. Right between whatever, 0.5 to 2% of the supply that's coming in. It's already being tested today, just in a very manual way with very limited data. What we're doing is automating this inspection process, and effectively the entire supply chain who's performing those tests are going to be our customers. We started about two years ago going to the market and we focused on the marketing companies, the guys in the middle, the packer, shipper, that works with all of the growers on the upstream and sell to the retailers and wholesalers downstream. And we have expanded in the last actually six months downstream to the wholesaler and the retailer segments. So today we effectively work with the marketing companies downstream to the retailer. The pain point that we are addressing is multiple and it also depends on the segment that we are interacting. But if you think about it on a high level, the biggest pain point, and I'm talking dollars wise, right. The biggest pain point is the rejections that are taking place in the supply chain.

Vonnie Estes, PMA:
Mm-hmm (affirmative).

Elad Mardix:
Based on information that we've seen, the average supplier in the market is suffering from about 7% financial loss as a result of rejections. And at the end of the day, the automation that we have with the AI and computer vision technology and the digitization that we're allowing, there are all tools. They are tools in order to do two things. Number one, help the supply chain to reduce the rejections that they are experiencing today. And number two, give them real time data so they can make better decisions. Like who is the right guy to sell to? Where should they ship it based on shelf life prediction. And effectively help them maximize, I call it the wallet opportunity with the customers that they are interacting with.

Vonnie Estes, PMA:
That's a great amount of information that can really help things move through the supply chain much better. So which crops are you working on and focusing on? Just anything that moves through the supply chain or are there particular crops that you focused on?

Elad Mardix:
Okay. So maybe I explain just before I go there, explain for a minute the solution that we offer. Our platform essentially can digitize any fresh produce category that exists in the market today. Digitize means that, let's say you are a retailer who has 275 fresh produce categories, we can essentially upload all of those categories on our platform so you can digitize the entire quality control process and the quality standards that you're using., right. So your inspectors, wherever they are don't need to actually use pen and paper, Excel or an electronic form anymore, everything is going to be performed through the mobile app. Now, we have developed our own computer vision technology to be able to analyze external attributes like size and color and stem color automatically. Through algorithm we're just taking a picture from the smartphone and this solution today is already commercially available for 10 produce categories. Started with table grapes, then we went with tomatoes, stone fruit, cherries, bananas and pineapples, as well as the citrus family and apple. So altogether we have about 10 products category that are already automated, we're going to have 10 more added to that automation capabilities within 2021. And I expect that within the next two to three years, we'll get to the vast majority of the volume, which is about 45 products categories.

Vonnie Estes, PMA:
Wow. So you truly are a global company working across the supply chain of wherever the food's going. Where in the world are your customers? What different regions are you working in?

Elad Mardix:
So about two years ago when we really started to go global, our first international customers who was in Spanish, which is in Chile and Israeli, is the world's largest exporter of stone foods, one of the top five in grapes. So we started really in Latin America and we have a very strong presence there today across Chile, Peru and Mexico. We then expanded to North America, both in Canada as well as in US. But I would say that probably the strongest market for us has been Europe, where we work with multiple very big marketing companies as well as the retailer.

Vonnie Estes, PMA:
And do you have offices there, people on the ground in these different areas? Or are you able to do it all from Israel?

Elad Mardix:
So good question because the answer would have been very different in March, last year before the COVID. So today we actually have offices both in the Americas, North America and in Latin America as well as in Europe. They usually, those offices include sales team as well as operation team that essentially helps with the initial implementation. But what's interesting is that in the last year, especially between March to December in 2020 because of COVID, we worked with customers globally. And I'll mention just one of them for example, we just started to work with Doyle International. We're all of the QC for Doyle's pineapples, bananas and we'll do the other categories as well. And the entire implementation process for Doyle, which took about four months, has been performed totally remotely. So we do have the local operations to honestly help close the loop, quicken. But we have demonstrated the ability to actually implement very complex project with very large customers in a total remotely way.

Vonnie Estes, PMA:
So this episode of the podcast is focusing on Israel. And there are an amazing number of agtech and food tech companies that have started in Israel and most of them are global. Why do you think that is? Why do you think it's such a good place to start companies and why are there so many good companies that have launched there?

Elad Mardix:
So I think the answer here is twofold. From a technology perspective, Israel is probably in the top two ecosystems in terms of technology entrepreneurial. Number one is probably the Silicon Valley and Israel is right behind it. So Israel is a leader within technology, entrepreneurship and development in any technology sector, right, not necessarily agri tech. This is a result of the nature of the people and I think a lot of the cultural related attributes that people are growing into. Specifically for the agtech and fresh produce in our case, to be honest, the local supply chain here, let's say within fresh produce, has a much higher or stronger propensity for technology adoption than you would usually find for other fresh produce players in the supply chain. So I just think it's easier to get your first couple of customers here like the beta product and check it with them. And we find the product initially before you go out to the world. And people here also on the supply chain side would be receptive for errors and mistake and they understand how it works. And that's I think the important underlying mechanism that enable new technologies to flourish out of Israel.

Vonnie Estes, PMA:
Oh, that's really interesting. I haven't heard that point of view before. But that makes a lot of sense. So what new technologies do you think are still needed in the produce industry at this point? And do you see those being developed?

Elad Mardix:
Yeah, so there's a lot of new technology that I can think of for the entire supply chain, obviously. But I'm going to focus on technologies which are related to the quality, which I think again, quality is important in any business, right. But as I mentioned before, in the fresh produce supply chain, it's more important than anywhere else because the quality actually changes on a daily basis. So it's really tricky to be able to measure it. I think two things are very important that should happen over the next three to four years. Number one, I would like to see the digitization trend really taking off across the entire supply chain, not just in specific silos and the retailer. For example, it really needs to go across the entire supply chain. And we have seen by the way a huge acceleration of that since June last year.

Elad Mardix:
And the reason I think it's important to happen is because if we really want to be able to figure out the shelf life prediction accurately in order to help in reducing the waste in this industry, the only way to figure out shelf life is by having digitization and collaboration of data across the entire supply chain. One silo having the information is not going to do the work. So that's one thing that is really important. And I do see a bunch of other startups and companies attacking this digitization trend from different places. And I'm really hopeful that we're all going to be successful in convincing the suppliers and the retailers that this is going to create a lot of value for these guys. The second new technology that I'm hopeful will be relevant to the supply chain is hyperspectral technology. Okay, so if you remember I mentioned that we developed our own computer vision technology to take pictures and analyze automatically external attributes.

Elad Mardix:
The technology that it's being performed on is the camera that we all have in our iPhone and Android devices. And it can only measure external attributes today, including defects. But only external. The holy grail would be that you Vonnie will take a picture and it will be able to analyze not just the external attributes but also the bricks or firmness, acidity, pH because then you're actually going to be able to analyze the quality of the fruit or vegetables and get a grade instantly. And when that happens, our technology is going to be applicable not just to the professional supply chain from the farmer to the retailer, but also to the consumer. And I think when we get this hyperspectral technology, which by the way, already exists. It just cost between 15 to $20,000 per camera in the sorting machines.

Vonnie Estes, PMA:
Might need to get that cost down a little.

Elad Mardix:
Well, yeah. And people are working on that. But I think it's probably going to be in the next five years when we start getting this technology into the camera of our smartphones. And at that point of time, the way it's going to play out is you're going to be able to pull up the Clarifruit app from your phone, go to the supermarket and before you buy these blueberry or watermelon, you just take a picture and you'll get instantly the quality grade and the shelf life prediction. And that's going to be a whole game changer for the industry in terms of waste reduction. But again, we're going to need hyperspectral technology to get to the smartphones, and that's probably four, five years away from us. So today, we're focusing on the professional supply chain, automating, decreasing process with the combination of their industry devices like the factor meter and dura meter. But really the vision is to be able to do it for everyone down to the consumer as soon as we can get this technology to the smartphone.

Vonnie Estes, PMA:
Wow, such wonderful conversations. As I mentioned at the start, I had so many exciting companies to talk to in Israel, I'm doing another episode. Look for the next episode to drop in a couple of weeks. That's it for this episode of PMA takes on tech. Thanks for allowing us to serve as your guide to the new world of produce and technology. Be sure to check out all our episodes at pma.com and wherever you get your podcasts. Please subscribe and I would love to get any comments or suggestions of what you might want me to take on. For now, stay safe, eat your fruits and vegetables and we will see you next time.