IFPA Takes on Tech

Vonnie Estes, PMA:
Welcome to PMA Takes on Tech, 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 ag tech sector, so I can attest, it's hard to navigate this ever-changing world in developing and adopting new solutions to industry problems.

Vonnie Estes, PMA:
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.

Vonnie Estes, PMA:
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 Part Two of the Focus on Israel. If you missed Episode 22, I recommend you listen to it as well, where we featured FruitSpec, Clarifruit, Copia Agro and Food Technologies Fund and Tal-Ya Agriculture Solutions. It was a very full and long episode.

Vonnie Estes, PMA:
This week, we return to Israel, as I really couldn't pack any more into Episode 22. In today's episode, we continue to look at innovation coming out of Israel, and why. We talk to two companies, NRGene and CropX, and then finish up with hearing about the Israel Innovation Institute.

Vonnie Estes, PMA:
These three speakers, along with the four from the previous episode, demonstrate the entrepreneurship and innovation coming out of Israel to help feed the world. Let's start with NRGene. We speak to Gil Ronen, founder and CEO of NRGene. Gil has been working with plant genetics for over 25 years. I've been aware of his work in this company and his previous company.

Vonnie Estes, PMA:
What I find amazing is how his company was very cutting-edge 11 years ago when they started, and with all the big technical advances, they still are. Let's drop in to the conversation.

Gil Ronen, NRGENE Ltd.:
I'm Gil. I did a PhD in Plant Genomics. Everything, all my professional career, I was in the genomic companies developing high-end AI tool and make them available to make better seed, better animal breed, et cetera. This is for myself. If we count the PhD as well, it's now 25 years.

Gil Ronen, NRGENE Ltd.:
With NRGene, we started NRGene 11 years ago with the very simple, but straightforward idea to say that there's so much data that we can help in choosing the best seed for every farmer, so while develop the tool that can analyze this data and enable on the computer to find the best genetic combination for every crop, for every geography. This is exactly what we do from the day we started until today.

Vonnie Estes, PMA:
There's a number of people thinking like that now, but 11 years ago, breeders weren't thinking like that. That was pretty revolutionary thinking.

Gil Ronen, NRGENE Ltd.:
Yeah. There were few things that were very different 11 years ago. First, in every significant breeding entity, there is the actual breeding, the classical, the natural breeding, which is done routinely every year, every season, and there was the biotech part.

Gil Ronen, NRGENE Ltd.:
The biotech part was where all the new innovation tools that are non-natural like GMO and gene editing, et cetera, this is where those part were tested the different technologies, and very rarely they were merged into a product. In most cases, even today, most crops and animal are all naturally bred.

Gil Ronen, NRGENE Ltd.:
The technology, the high tech was not involved to that level in the natural breeding, which again, in our understanding, this is a waste of a resource, and this is why we try to change. This was one thing that it was really thinking differently, but then, when we try to realize how much data we need to analyze and what are the tools that are necessary, if you do breeding of tomatoes, for example, so you have thousands of different plant, each of them with different genetic combination, and each of them have about one billion letters in the DNA.

Gil Ronen, NRGENE Ltd.:
You have really a huge amount of information you need to accumulate. You need to store it and you need to analyze in order to find the very basic differences in the DNA that make one tomato taste better than other. This was something that people didn't believe any computer can handle, and even the cloud where they do at the very beginning, they didn't believe it's possible.

Gil Ronen, NRGENE Ltd.:
They say Amazon doesn't have enough cloud power to do this level of analysis. What we did, we try to shrink the data, to condense it to a way that a machine, a computer can handle, and then we can analyze all the data and find those genes, the beneficial genes.

Gil Ronen, NRGENE Ltd.:
This is something even a very, very sophisticated cloud computing company didn't believe this is possible to do, and this is what our challenge, and I'm very happy to say that now we are successful and now many others do similar things.

Vonnie Estes, PMA:
Who are your customers now? What types of companies do you work with and what's an end product for them that you develop?

Gil Ronen, NRGENE Ltd.:
Within the value chain, there are companies that develop new seeds or new animal breeds for farmers and sell them to farmers. Farmer that grow wheat, for example, every year they buy new band of seed of wheat and they sold them and they grow them and they put fertilizing and wait for the rain, et cetera, or irrigate them, and eventually get the yield.

Gil Ronen, NRGENE Ltd.:
Every year, they could get different varieties of seed, and these new varieties is supposed to be more productive, more efficient, resilient, better drought or other stresses or different pathogen. We work with the companies that constantly developing new seed for the farmer and new animal breed for the farmer to make the farming more productive.

Gil Ronen, NRGENE Ltd.:
Those are the companies. There are two types of companies. The company that this is actually their business, they are called seed companies or breeding companies. They are your giant companies in this space like Bayer, Syngenta and Corteva and BASF and Limagrain and KWS. They're all working with NRGene today. This is one type.

Gil Ronen, NRGENE Ltd.:
Another type is companies that say I produce food or I produce a beverage or I produce rubber or I produce alpo paper, and I need to make sure that farmers grow the best raw material for me. If I'm a chocolate company, I need to make sure that farmers grow the highest-quality cocoa. If I'm not able to do that, then I'm losing my business.

Gil Ronen, NRGENE Ltd.:
Some of those companies now more and more take the responsibility on developing new varieties of coffee or cocoa or rubber trees or eucalyptus for paper, and this way they make sure the raw material they made will be produced to the highest quality. This is the other type. This is the industrial companies like food and beverage companies, et cetera, that are involved in breeding because they cannot afford having not the highest quality of the raw material for their end product.

Vonnie Estes, PMA:
Companies like that, do they have the germ plasm or do you work in public germ plasm? Where does the germ plasm come from?

Gil Ronen, NRGENE Ltd.:
This is very good question. Seed companies that sells into pharma, usually they own their own germ plasm. It's very broad, it's very diverse. We have the whole plain ground to sexually-cross between different varieties and choose the best progenies, the best seeds for the next generation.

Gil Ronen, NRGENE Ltd.:
In the food and beverage and other industrial companies, sometimes they have their own genetic material, and sometimes they rely on other resources. It could be public resources, it could be some academia that work, for example, do breeding of cocoa in Africa or something like that.

Gil Ronen, NRGENE Ltd.:
This way, now we need a three-way collaboration between the end producer like the chocolate maker, the breeder which is academia that do, maybe it's breeding of cocoa, and ourselves. In many cases, this is the current situation. We can handle with that. We know how to work with all breeders of all crops and bring the value.

Vonnie Estes, PMA:
If you were working with, say, a chocolate company or a food company like that, if they came to you and they said, "We want a certain trait," how long would it normally take before they'd actually have that trait? I know it depends, of course, but is it 10 years? Is it five years? What's the range?

Gil Ronen, NRGENE Ltd.:
It depends on the lifecycle of the organism, the crop you work with, because we are advanced from one generation to another generation. If we work in cannabis, that you have a single generation in 10 weeks, so it's move very fast. If we work with cocoa, that a single generation could be six or seven years, it moves pretty slow.

Gil Ronen, NRGENE Ltd.:
In those cases, the companies actually need our technology more because what we do, we predict, for a given genetic combination, how the plant will perform in the field. If our predictions are accurate, they can select the best individual before they can realize the full potential of the specific plant that can take five or six years. The longer the lifecycle, the more they need us.

Gil Ronen, NRGENE Ltd.:
If we take a chocolate company, of course they want the highest-quality cocoa, but they need a farmer to grow the plant, and in some regions, because of climate change, there are more seasons of drought or heat or there is a new fungal disease that spread and they need to be able to cope with it, et cetera.

Gil Ronen, NRGENE Ltd.:
They don't want to spray chemicals because they don't want the chocolate to have a ... chocolate with chemicals, no one wants that. We want it to be as clean, as natural as possible. They are coming to us. We are talking to the breeders and they say, "We have very good cocoa trees that resist drought and very good cocoa trees that resist this fungi. We have very good-quality cocoa trees, but this is different tree. It's not everything in one."

Gil Ronen, NRGENE Ltd.:
They ask us to make everything in a single tree. What we do, we do two things. First, we do sexual crosses between those trees that contribute different genes or different traits of interest, and we analyze the full genomic makeup and we actually identify on the computer what are the genes that increase the quality, what are the genes that give the resistance to the fungal disease and what are the genes that help the plant tolerate drought.

Gil Ronen, NRGENE Ltd.:
Now, we can do on the computer and we can predict which of the next progeny will have the genetic combination that will bring all the traits together. Then, they can take them after the crosses, a few, two months after the crosses, they can select the most successful plants according to our prediction.

Gil Ronen, NRGENE Ltd.:
Now they can grow and focus only on them. It will probably take years before they realize that all our predictions are true, but at least they don't need to grow hundreds of thousands of trees and wait for so long. They can focus on those.

Gil Ronen, NRGENE Ltd.:
Because we completed close to 300 projects and our prediction rates are so high, relying on our technology is the best bet they had. This way, instead of getting the same trees in 20 years from now because they need three full generation, they can get it in a single lifecycle or two. We cut significantly the time from the moment they realize this is what the new variety they need until it's ready to use.

Vonnie Estes, PMA:
You recently went public and hired some new senior staff. Congratulations on that. Where do you see NRGene going? What are you planning on going forward with the money you've raised and the staff? Are you going in different directions?

Gil Ronen, NRGENE Ltd.:
In the first years, we build the best technical staff. We are located in Israel. We have 40 technical staff, many data scientists, and they work with software engineers and mathematicians and others, and geneticists of course. They are all working together. This is the brain. This is the brain of the company, and this is the people that make those tools that can resolve very, very tough genetic challenges.

Gil Ronen, NRGENE Ltd.:
Now, of course we are in Israel and we are very good in ag tech, but Israel is very, very small in ag. We have very little land. We have very expensive water. We are not that big in ag. Actually, our technology is required in the US, in Canada, in Brazil, in China, in India, et cetera. This is the place where the technology is required.

Gil Ronen, NRGENE Ltd.:
In order to work closely with the companies that produce the seed for farmers, we need to be also close with the farmers and the grain producers on the value chain. The way we expect to grow is to put a local entity that do the actual project hand in hand with the customers, or that now become more collaborators than customers.

Gil Ronen, NRGENE Ltd.:
This way, we better realize the need, we have immediate use of the technology, et cetera. However, the same brain, the same AI software and the people will run it, we can have one in Israel. We can have 10 different location when we work closely with our customers or collaborators and do the all analysis on the cloud with a single tech team that is very special. They've very unique globally, with very unique capabilities, but they can serve all those project.

Gil Ronen, NRGENE Ltd.:
This is the idea. By doing that, not only we come closer to the customers and we work more efficiently, we are also entitled to co-own the new IP, the new seeds that we produce together, and get royalties from the sale of the seeds for the farmer.

Gil Ronen, NRGENE Ltd.:
We are commercial company, so revenue is also important. We try to feed the world and we hope we do something to improve food availability, but still, we try also to generate more revenue, but by the way of getting the revenue model of royalty or revenue share. Over there, of course the market is way bigger and the opportunity for the company is greater. This is on one end.

Gil Ronen, NRGENE Ltd.:
On the other end, our customers, we work together with them, so if there's no product in the end, we don't get any revenue. We take a risk on the short term with the big opportunity on the long term, because if you develop a new tomato seed variety or a cannabis strain or banana, usually it's the same variety have a significant market share for years. It's not a single year. It could be anywhere from three, four years to 20 years.

Gil Ronen, NRGENE Ltd.:
The fact that we do one effort and then get annual revenues for many years, of course, increase the potential of this project in terms of a revenue for the company. This is the way we believe we need to move forward. Actually, it was announced, but it was in Hebrew, so maybe some of the audience missed that, that we opened a lab in Saskatchewan in Canada-

Vonnie Estes, PMA:
Oh!

Gil Ronen, NRGENE Ltd.:
... to serve the collaborators we work with, yes, in many, many of the key Canadian crops like wheat, canola of course, some of the legume. We have some projects for alternative protein from legume, cannabis and hemp, and other stuff that is very commonly produced in Canada. It makes a lot of sense to be there.

Gil Ronen, NRGENE Ltd.:
We actually now have five people on the ground in Saskatchewan, and this is growing and probably will be doubled by the end of the year. We hope this lab will start to operate and do R&D projects very soon.

Vonnie Estes, PMA:
Great. I have one last question for you. This episode is focused on Israel, and I've talked to a bunch of amazing companies. What has been the advantage of starting your company there, besides the fact you live there?

Gil Ronen, NRGENE Ltd.:
This is a big advantage, yeah. I think Israel is one of the best place for innovation, for several reasons. First, and the most important, you have a lot of relevant, excellent people. If you think of it, if you are a software engineer, I'm not sure working in a startup, working in ag tech is something that is on your radar, but in Israel, it is.

Gil Ronen, NRGENE Ltd.:
In Israel, because there are many architect and biotech companies and because some of this software engineer is used to work three years here, three years there, and sometimes it's in a very, very company, and because we have the high tech hub, we have a lot of real excellent people.

Gil Ronen, NRGENE Ltd.:
Actually, if I think what is the one thing that makes us special is the people. Actually, because they are moving from different companies and different industries, they are very open-minded. It's not like one software engineer work in some kind of a single company for 20 years. They are very open-minded. They are trained and they are practiced to solve challenges that they didn't even think of before, et cetera.

Gil Ronen, NRGENE Ltd.:
This is the treasure. This is the treasure, and I think to find ... now we have 40 people that come from so different backgrounds that can work together, speak together and be able to develop a product together, this is something that is very unique. Again, I was fortunate to hire the right people. This is the key to NRGene's success, no question about. This is one thing.

Gil Ronen, NRGENE Ltd.:
The other thing is, again, although we are Israelis, the global companies tend to work with Israeli companies because they have a good experience. They know we are not working by the book and it's not the most organized organization; however, we are very innovative and we are very flexible.

Gil Ronen, NRGENE Ltd.:
They are not surprised if a new innovation is coming from Israeli tech company, and this is actually open door for us. If you say you are from Israel and you approach a company like there, Syngenta, they say, "Oh, this is so and so. Let's see what their new ideas are now."

Gil Ronen, NRGENE Ltd.:
I was part of the fact that we build this brand of Israeli ag tech, but it started way before I was there. This many, four, five decades of this level of experience, et cetera, it pays itself. This is I believe the second thing.

Gil Ronen, NRGENE Ltd.:
The third is that it's relatively easy in Israel to get what we call seed money. Seed money, the money to start a company, not the seed business with the seed money. It's relatively easy because there are many early-stage investor. Some of them are private investors, what we call angels, some of them are venture capital entities, and there is matchup fund from the government usually.

Gil Ronen, NRGENE Ltd.:
If you are young company and doing pure R&D, you get some matchup fund from the Israeli Innovation Authority. This of course helps you move very faster. I think this is the three main elements that makes Israel the best place to start an ag tech company.

Vonnie Estes, PMA:
The next conversation is with Matan Rahav of CropX. CropX is as high-tech to sensors as NRGene is to genetics. This is a fascinating conversation about sensors, water savings, the cloud, and AWS.

Matan Rahav, CropX Technologies:
My name is Matan. I handle business development at CropX. I joined about two and a half years ago. My background is actually soil and water sciences. During my master's degree, I've conducted a research at a commercial citrus orchard, and that was when I played around with just about any type of soil-sensing technology that was available at that time.

Matan Rahav, CropX Technologies:
When I saw what CropX was doing, I immediately fell in love with the solution and I basically came here knocking on the door, asking for a job. I haven't looked back since. CropX is an agricultural analytics company that revolutionized and automated the farm decision-making process, mostly around irrigation and nutrition management, by developing the world's first, and only, I think, farm management platform that based on real-time soil data, measured by proprietary, self-installed sensors that we developed in-house.

Matan Rahav, CropX Technologies:
We started selling our product in 2018 and we were able to scale quite rapidly. Last year, we became the leading company in the world in terms of real-time installing data points, with almost 9,000 installations worldwide.

Vonnie Estes, PMA:
Wow. What's different about your soil sensors? There's other soil sensors out there. What's different about yours and what kind of information does it give that's different than the other ones?

Matan Rahav, CropX Technologies:
I would say that it revolves around four main points. The first is the scalability. The fact that our hardware is self-installed based on do-it-yourself approach means that we don't have to physically travel for new projects. It doesn't require our boots on the ground.

Matan Rahav, CropX Technologies:
Our sensor takes just one minute to install. Anyone can do it. It doesn't require any calibration or maintenance at all, so it's plug-and-play. This allows us to be the most scalable solution in the market.

Matan Rahav, CropX Technologies:
The second point is the fact that we close the loop. We don't only focus on above-ground data or below-ground data, but we represent the entire soil-plant-atmosphere continuum. With our proprietary hardware, the satellite imagery that we integrate into the platform, and we integrate many additional data layers like topography, crop models, hydraulic models, soil maps and more.

Matan Rahav, CropX Technologies:
Everything gets crunched in the cloud so that we can provide actionable insights, not just raw data, but bottom line, how we can help farmers make better decisions. Everything is done in-house. We have a very large team of engineers, software engineers, hardware engineers, data scientists, agronomists. We have all the expertise in-house to be able to make an impact.

Matan Rahav, CropX Technologies:
The third very significant advantage is that we're backed by a world-class syndicate of strategic investors, like Google's Eric Schmidt's private fund, Innovation Endeavors. He fell in love with CropX because of our vision to become the Google on soil.

Matan Rahav, CropX Technologies:
We have Flex and Bosch and Sumitomo Corporation, a giant Japanese trading company, and Reinke, one of the world's largest irrigation system manufacturer, Finistere, that's one of the world's largest ag food VCs. We have a great syndicate of investors that helped us scale rapidly.

Matan Rahav, CropX Technologies:
The fourth and last point is that I think we're the only ag tech startup that is already starting to position itself as the market consolidator. I know that you wanted to ask me about that later, but we've already made two acquisitions and we're currently involved in another acquisition that hopefully I'll be able to announce publicly soon.

Matan Rahav, CropX Technologies:
I think this already proves that we're not a very young startup. We're already mature. The market syndicate technology risks, these are all behind us. Now really our key focus is our continuing growth via strategic partnerships and acquisitions.

Vonnie Estes, PMA:
Let's touch on that now. I thought that was really interesting when I was reading about the company is that most companies at your stage aren't making acquisitions. Talk a little bit about why you decided to make acquisitions and what that brought to you as a company.

Matan Rahav, CropX Technologies:
Sure. First of all, I would say that you can divide acquisitions into two main objectives. One would be the technology behind it, and the other would be the channel.

Matan Rahav, CropX Technologies:For us, we examine both opportunities as they present themselves. The COVID pandemic created a lot of interesting opportunities that were brought to our doorstep even without us actively looking for opportunities, which is interesting.

Matan Rahav, CropX Technologies:
With the first acquisition, CropMetrics, it was mostly around the channels. CropMetrics started bottom-up. They're not a VC-backed company that started top to bottom. Really it started by farmers to farmers, very local, US-based, irrigation management platform that integrated a third-party soil sensor.

Matan Rahav, CropX Technologies:
They, too, realized that they had to close the loop and get below and above-ground data to be able to provide interesting insights and actionable insights, but they didn't develop their own hardware. They used a third-party soil sensor, which prevented them from being able to scale the way we did.

Matan Rahav, CropX Technologies:
When we acquired them, they already developed a well-oiled solution channel of 150 dealers serving 1,000 clients with a very high retention rate and 500,000 acres under management and over 10 years of agricultural data collected in their platform. With that acquisition, we managed to get an amazing channel into the US farmers segment and to add a lot of agricultural data into our platform.

Matan Rahav, CropX Technologies:
Going back to the second acquisition, it was a little bit different. Regen is the company that we've acquired in New Zealand. They were founded also in 2010, also a well-established brand that have become a local leader in effluent irrigation management. That acquisition allowed CropX first to get a foothold into a new market, New Zealand, and a new product in a new high-value use case, interesting effluent irrigation and the entire dairy industry.

Matan Rahav, CropX Technologies:
Before that acquisition, when we started, we were focused on irrigation management. Then slowly we've developed into nutrient management, but for crops, and that really unveiled a completely new market for us, which is the dairy industry. That was thanks to this acquisition.

Matan Rahav, CropX Technologies:
Also, that has increased our sustainability offering, helping farmers prevent runoff and leeching of cow manure, basically. Also, we've added I think over 100,000 acres under management in New Zealand, including some very important strategic corporate customers that Regen were serving.

Matan Rahav, CropX Technologies:
This also strengthened our sales network. With ag tech, it's very important to flatten out your seasonality curve, because what if you only operate in the US? Then your season is around three months, and then in the remaining year, you basically have to sit down and wait and prepare for the next season.

Matan Rahav, CropX Technologies:
By opening the New Zealand market, we were basically able to have business all long year long, and obviously, recurring revenues from hundreds of active farm clients with a very high retention rate. All of these things were made possible thanks to this acquisition.

Vonnie Estes, PMA:
What geographies are you in, then? You're in New Zealand, you're in the US, you're in Israel. Where else are you?

Matan Rahav, CropX Technologies:
Almost everywhere, apart for Antarctica these days.

Vonnie Estes, PMA:
This must be partly because it's not a complicated installation process, so you don't have to have people everywhere, so you're really able to scale in a way that other companies probably can't if they have to have people on the ground everywhere, right?

Matan Rahav, CropX Technologies:
Exactly. Usually, when you have a product that is not do-it-yourself like ours, it's usually by first opening a local presence that allows other companies to provide the installation support services, but we don't have to do that.

Matan Rahav, CropX Technologies:
We can reach anywhere with our Zoom meetings and shipping the sensors to be installed by the user. Yes, that allowed us to scale very rapidly and to be able to get to many new places. We have deployments in countries that I never even traveled to in my life. Sometimes I envy my sensors.

Vonnie Estes, PMA:
You wish you could go along with them. You had mentioned COVID earlier, that it had brought some opportunities. How else has COVID affected the company and your deployment?

Matan Rahav, CropX Technologies:
The global pandemic actually served as a great opportunity for CropX. We were very lucky in this regard. Yes, we had sufficient funding and inventory, but more than all, it is our do-it-yourself approach that allowed us to scale very rapidly even during the pandemic.

Matan Rahav, CropX Technologies:
We continued shipping thousands of systems. We actually broke our sales record in that year, and that was thanks to our do-it-yourself approach. That is when all other companies had to stop all new projects because it requires their physical presence or their boots on the ground, but we managed business as usual. We were very lucky in this regard.

Matan Rahav, CropX Technologies:
Also, I would say that during that time, farmers even realized more than ever the importance of being able to remotely monitor their fields. Ag tech got a huge boost during this time.

Vonnie Estes, PMA:
I think we've seen that throughout the whole supply chain, all the way from on the farm through harvesting through shipping product, that people that were used to seeing everything with their eyes had to finally rely on the technology in all those different points.

Vonnie Estes, PMA:
We've seen an uptick of lots of different technologies from shipping and storage and through the supply chain as well. It'll be interesting, as we look back, what a big impact of leap forward technology took during COVID because people couldn't look with their eyes. They had to depend on it.

Matan Rahav, CropX Technologies:
Exactly. It's almost forced adoption and accelerated adoption. Yeah, definitely.

Vonnie Estes, PMA:
Exactly. I have a geeky question for you. I read that you are using AWS. One of the challenges in the industry right now is the need to build and use analytic tools, which, not everyone has that ability. The question is often, do we build or do we buy or do we use a service? How did you decide, and how did you think about that? Maybe that happened before you joined the company, but how do people talk about it?

Matan Rahav, CropX Technologies:
First of all, I think there is no right answer or a formula to this question. It really depends on what the organization is trying to do. We as an Israeli startup, we knew that we could very easily recruit a powerful team that could do that maybe better than anyone else.

Matan Rahav, CropX Technologies:
We knew that there are many things that we are going to build ourselves, and obviously when you develop it yourselves, you have more control of the entire supply chain, including, by the way, hardware manufacturing. We assemble the sensors in Israel. We do everything here.

Vonnie Estes, PMA:
Oh, wow.

Matan Rahav, CropX Technologies:
There's a lot going on. It's very interesting. There are some things that we're considering to acquire because it will be faster than it would be than to develop it ourselves.

Matan Rahav, CropX Technologies:
We spent several years in perfecting our hardware and our current platform, and we understand the time and effort it takes to get there. We understand that to develop products that are very different than what we are doing right now, if it's completely unrelated, it will take maybe the same time that it did to get where we are right now.

Matan Rahav, CropX Technologies:
It might be interesting for other technologies that we're considering integrating into our platform to buy instead of building, and this is also something that we're actually doing at the moment. I've mentioned the potential acquisition earlier that you will hopefully hear about-

Vonnie Estes, PMA:
Great.

Matan Rahav, CropX Technologies:
... hopefully soon.

Vonnie Estes, PMA:
I have one more question for you. These two episodes that I'm doing on Israel, as I mentioned, is featuring Israeli companies. What do you see are the advantages of starting a company in Israel, and are there ways that the ecosystem could be better?

Matan Rahav, CropX Technologies:
I think we are very lucky to have been established in Israel. I think Israel has one of the most successful, vibrant innovation ecosystem.

Matan Rahav, CropX Technologies:
First of all, Israel is a small place. It's very easy to get connected to all different industries and verticals. Just walking around the block, you can see people that have served in technological units in the Army, or you have farmers that are right next to your doorstep, and the kibbutz movement that I told you about before we had this call.

Matan Rahav, CropX Technologies:
Israel is the perfect ... with different technological backgrounds, different experience in a small place. Israel is one of the first country that have invested in what the public sector had invested in private sectors' and academic sectors' R&D. That really created a very interesting type of relationship between the academic sector, the private sector and the public sector in Israel.

Matan Rahav, CropX Technologies:
There's so many communities for every different industry. There's a planet tech, there's desert tech, there's water tech, there's everything tech. Everything has a very vibrant community, such that the different people from the different parts of the industry could engage and brainstorm.

Vonnie Estes, PMA:
I want to hear more about the ag tech ecosystem in Israel, and it certainly seems you are the person to talk to. Please tell me about yourself and the Israel Innovation Institute.

Doron Meller, Israel Innovation Institute:
Nice to meet. My name is Doron Meller. I'm the VP of the Israel Innovation Institute. It's a small NGO, nonprofit, non-revenue, managed around six innovation communities. Growing IL, the active community, is among them.

Doron Meller, Israel Innovation Institute:
What we're trying to do is we're trying to do two major thing. First of all, we're trying to do an ecosystem development. This mean that we want to create and connect all the relevant players in the ecosystem in one sector, let's say the agritech, this is one time, and help the companies, the entrepreneurs and the connection between all of them, et cetera.

Doron Meller, Israel Innovation Institute:
The second thing, we want to create better connection between what we call the demand and the supply. The demand is the market itself, its innovation challenges. It could be a agribusiness company or a farmer region, et cetera. We have the other and we have the supply innovative solution, which means that startup companies and so on, and what we are doing is open innovation processes who can better connecting both side over to get to a pilot better site implementation and so on.

Doron Meller, Israel Innovation Institute:
We do it and what we consider the impact sector like digital, health, smart implementation, agrifood tech, desert tech, climate change and so on. This is more or less the Innovation Institute. I manage also Growing IL as one of the communities.

Doron Meller, Israel Innovation Institute:
What we're working together with the government, in this case the Ministry of Economy, Ministry of Agriculture and Innovation, Israel Innovation Authority, what we're trying to do is create better and bigger ag tech ecosystem in terms of more companies, more investments in growth stage, more employees, more solution towards the globe, and also to help the local industry. This is more or less Growing IL and the Innovation Institute.

Doron Meller, Israel Innovation Institute:
About the Israeli ag tech ecosystem, I think it's one of the maybe top dynamic ecosystem in the sector of ag tech in the world. It's at around 500 company techs, among them 300 startup. Let's say that relatively to the US, it's small numbers, but per capita, it's maybe number one in the world.

Doron Meller, Israel Innovation Institute:
Just mention AgFunder report in 2020 that currently, the Israeli agri food ecosystem raised around $480 million, which is not ... again, relative to the US, it's very small, but per capita, it's first in the world. Beside the companies, we have I would say living research institutes such as the Volcani Institute, the Hebrew University and Weizmann Institute.

Doron Meller, Israel Innovation Institute:
You can connect this the general, I would say, high-tech atmosphere because we see a lot of people coming from that general high tech, from other sector in the high tech that contribute their abilities to create solution who can make better agriculture and better solution for in this term. You can put people from robotic or from AI or from machine learning, and they're getting their abilities and translate it into a better and impact agriculture.

Doron Meller, Israel Innovation Institute:
Another thing just to name that we have in Israel, you can say, traditional farmers, but since Israel establish 70 years ago, we managed to do more with less. I think this is one of the abilities that build the knowledge of precision agriculture, how you can do more accurate water management, fertilizer, et cetera, and I think the Israeli farmer is more open to innovation relative to other farmer on the world, from the world.

Vonnie Estes, PMA:
I have a couple questions off of that. You were talking about linking demand and supply. When you look at demand for solutions, you must be always looking globally as well, because Israel's a smaller company, so when you're working, you're looking at, how can we deploy technology globally. Is that right?

Doron Meller, Israel Innovation Institute:
Yeah, exactly. As we're talking about Growing IL, we consider just the globe. A little bit of the local, but the ag tech market is globally know that we're working also with big companies. Just for example, we did a process of open innovation with Bayer Crop Science, the biggest agrochemistry company of the world.

Doron Meller, Israel Innovation Institute:
They are trying to look around the Israeli ag tech different and new ideation for automation in phenotype on vegetables, for example. This is what we're trying to do. No doubt that we're trying to tackle the global challenges, yeah, the food crisis, climate change crisis, et cetera.

Vonnie Estes, PMA:
When you talk about the amount of money that's been invested, is that also from VCs and firms inside Israel and outside? Where do the investment dollars come from?

Doron Meller, Israel Innovation Institute:
I would say in general that we see a development in creating more VCs with focus in agri food on the world and in Israel as well, but money is invested also from a lot of foreign VCs and also from Israeli funds. Both.

Vonnie Estes, PMA:
The other thing you mentioned that caught my interest was just talking about talent of being able to bring ... that you have a lot of people that are educated and schooled in high-tech disciplines and being able to recruit them into the ag tech field.

Vonnie Estes, PMA:
That's certainly one of the things I think we struggle with more in the US is that a lot of people in those fields can make more money and it sounds more interesting to them to go into other high-tech areas, and they've never heard of agriculture. Why do you think in Israel that you're able to get that cross-fertilization of bringing tech people into ag?

Doron Meller, Israel Innovation Institute:
First of all, I have to say honestly that in Israel, it's also a challenge. It's not that clear that everyone is coming to agritech. In the end of the day, agritech is, like you said, a little bit more risky and could be, will be less invested from some reason.

Doron Meller, Israel Innovation Institute:
It's not that simple, but I think in general, I don't know if Israel is unique in that case that people from some time to time [inaudible 00:48:13] to just develop the next application, the internet side, whatsoever, and they want to do good. They want to do an influence on impactful way on the world.

Doron Meller, Israel Innovation Institute:
They are looking for sectors like agri and food and maybe health, and maybe climate change, to do better, because after you make money and after you did the high-tech scene for one or two or three or five or 10 years, you are looking to make your influence better on the world. I think this is the most present reason.

Vonnie Estes, PMA:
You hear different people say that here in the US, it's like, "I don't need to design another shopping cart for another app." How many times do you need to do that?

Doron Meller, Israel Innovation Institute:
Exactly.

Vonnie Estes, PMA:
That's great. How did the Institute come together?

Doron Meller, Israel Innovation Institute:
I think 10 years ago, exactly 10 years ago, was one entrepreneur, his name, Leonid Bachman, he's still entrepreneur, but now he's the president of the Institute. He said, we have pretty developed high-tech scene, but in the end, the self-entrepreneur is working in his garage all alone, working all alone, and we need to see how we can make a better system to help one sector such as agritech or mobility or something to develop, and then how we can find the market failure and how we can support the one person to be more effective and create more opportunities, more companies, et cetera. This is one thing that we call ecosystem development.

Doron Meller, Israel Innovation Institute:
The other thing that I think that the Institute did in the last 10 years, that working with the government on a area of impact. Let's work with the government of agriculture, let's work with the government on mobility or climate change, and let's not work with the government on internet side or another just application. Let's direct the government to bring their sources, and together, we can do impact from Israel to the world in impact sectors.

Doron Meller, Israel Innovation Institute:
I think this is the most two meaningful reasons why the Institute was raised. Another thing I can say, we talk about the demand side, so in terms of Israel, one of the goals of the Institute is to make a better service pattern and to work within hospital, with public service, and we can create and help to create more innovative service or solution to the citizens, so Israel is enjoyed from innovate solution as well. This is maybe can be the third reason.

Vonnie Estes, PMA:
How would you describe the ag tech ecosystem in Israel and how has it changed over the last five years? How do you see it will change over the next five years?

Doron Meller, Israel Innovation Institute:
I would say that Israel is traditionally, I would say, innovative. You take companies such as Netafim bring innovative solutions, water management since the 1970s, et cetera, but they think after few decades, you can see in the last decade, maybe the last 15 years, a lot of the rise of new companies.

Doron Meller, Israel Innovation Institute:
You can see a layer of 200 new startup who combine with the Israeli scene, and then you see a lot of innovative solution and new solution combined from the tech sectors to the agriculture sector and combined together to a new solution. This is one thing.

Doron Meller, Israel Innovation Institute:
Another thing is you see, even though ag tech is a bit in risk comparing to other sector in high tech, you can see more and more investing in the sector. If you take the 2014 since you see around $50-million investment in the Israeli scene, and now in 2021, you can see around 480. This is another thing.

Doron Meller, Israel Innovation Institute:
I think Israel in the last decade developed a lot of smart farming, precision agriculture solutions, but now, I hope to see, if you talk about the last five years, so we see a lot of dominate in the area of smart farming, a little bit of biotechnology and a little bit of supply chain, and what I really hope to see in the next five years is, first of all, in general I want to see more growth company, maybe even to dream about unicorn something like that, but to see more growth stage, more money, more people work in the ag tech general.

Doron Meller, Israel Innovation Institute:
I think I want to see more solution in the, like we talk earlier about the global link, so more gene editing and resistance on probes and more solution of robotics in terms of the labor issue, which is a very big issue in agriculture, and I would say to see more sustainable agriculture.

Doron Meller, Israel Innovation Institute:
It can come from alternative protein solution, plant-based, et cetera, but also from a regenerative ag and more urban agriculture, indoor agriculture, which I said relatively in this area, Israel is a little bit behind the world. I really want to see more variety in the solutions, more growth companies, and more people in the industry.

Vonnie Estes, PMA:
Great. One thing that's interesting that I'm starting to see is in areas like indoor ag is that as that matures, we're starting to see more and more companies that are developing technologies to support that industry. I can imagine seeing better AI companies or better lighting companies or those water use companies, those types of things being built. It's not just people building the farms, but it's the technology that the farms will need, and that would make sense to get people working on that, too.

Doron Meller, Israel Innovation Institute:
Yeah. Exactly.

Vonnie Estes, PMA:
That's a wrap on my focus on Israel. Working in ag tech for so many years, I was very aware of innovative companies coming out of Israel. What I didn't realize is how many there were, and what a great ecosystem for innovation it is based on generations of doing more with less and developing close-knit communities that work with each other over lifetimes.

Vonnie Estes, PMA:
This is the end of this season, and we're talking a couple weeks off. I'm taking my first flight in over a year to see my mother, then I'll be back taking on Chile, Mexico, microbial solutions, carbon and more. See you soon.

Vonnie Estes, PMA:
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'll see you next time.