With Yoni Glickman, Managing Partner of FoodSparks® by PeakBridge
We sat down for a conversation with Yoni Glickman, Managing Partner of FoodSparks® by PeakBridge, to explore the differences between Israeli and European entrepreneurs in FoodTech and the things they should learn from each other.
CAN YOU DESCRIBE THE DIFFERENCES BETWEEN ISRAELI ENTREPRENEURS AND EU ENTREPRENEURS IN FOODTECH FROM YOUR VIEWPOINT?
As we at FoodSparks® invest both in Europe and Israel, I do notice differences between Israeli entrepreneurs and EU entrepreneurs. First of all, one of the interesting things we see in Israel is tech transfer and the desire of people coming from academia and science disciplines to create startups. Often, we see Israeli entrepreneurs creating very early-stage pre-seed companies based on technologies from labs in their Universities. The second factor is geography. Israel has become an important FoodTech hub in the last few years. Because it is an economic island, Israel has to be outward-looking since it is impossible to develop a market limited to Israel. Moreover, in FoodTech, Israel has kosher barriers and very limited scale-up facilities. This is why Israelis typically look at scaling in the US, so cost and timelines are much more ambitious, and plans are underpinned by fundraising.
In sharp contrast, European entrepreneurs have immediate markets. For that reason, we often see startups that are very successful in their city or country. When European entrepreneurs think of scaling up, they think about the country next door, or in their region, compared to Israel’s island-mentality with no immediate ability to scale up. However, there is a question of how scalable Europe is as opposed to the US. In Europe, there are different languages, governments, and economic drivers, which can be more challenging for scale. At FoodSparks®, we see many EU entrepreneurs that are very grounded in how they create fast revenues and scale their companies with cash flow that they can generate. Many Israelis are more focused on how they can raise funds for scale and go-to-market in the US.
YOU MENTIONED ISRAELIS STARTING POINT IS TECHNOLOGY. WHAT IS THE STARTING POINT FOR EUROPEAN FOUNDERS?
I think that EU founders look at market needs and are very focused on ESG impact. The entrepreneurs we talk to are often highly focused on ESG and sustainability as an essential driver to what they do and why they are doing it. In the AgriFoodTech space, I do believe it is necessary to be grounded in impact goals. With European entrepreneurs, we observe that this is often the primary motivator, whereas, in the Israelis startups, the primary motivator is “how do I scale a technology?”.
WHAT DO YOU THINK DRIVES THE GAP BETWEEN ISRAELI AND EU ENTREPRENEURS?
Israel has a strong unicorn culture, so the entrepreneurs are exposed to what is happening in the world of successful startups and the strong drive of technology in Israel’s economy. That allows the entrepreneurs to dream big and have yet higher ambitions. Of course, larger scale dreams and ambitions, can also fail on a monumental scale. In Europe, this serial entrepreneur culture is a less dominant part of the economy than in Israel. Additionally, the EU is a union of countries with thousands of years of history, and successful industrial enterprises. Israel is a country that is now 70 years old with no natural resources, no direct access to markets, no neighbours for trading. All of that results in a different legacy that can answer the gap between Israeli and EU entrepreneurs.
WHAT CAN THEY LEARN FROM EACH OTHER?
In FoodSparks®, our seed fund for European FoodTech startups, our primary job, is to bridge this gap and help startups learn from the strengths of other startups in the fund in my opinion. There are two main tendencies I would like entrepreneurs to take from each other. Firstly, Europeans should learn to be more aspirational and have greater dreams, which means emphasizing a faster scale and getting into new markets. Secondly, Israeli startups ought to be more grounded in early-stage customer interaction, creating revenues and projections around products rather than spending a significant time raising money. Israeli startups often focus on how to-go-to-market with a breakthrough technology but instead should be getting feedback from customers early on.
This would be wonderful.
HOW DO YOU THINK COVID-19 AFFECTED ENTREPRENEURS IN BOTH PLACES?
At the beginning of COVID-19, all of the funding activity stopped, so there was a significant period where people were trying to understand what was going on. Now we now know that the economy has to keep running, resulting in the continuation of funding. There also seems to have been a tremendous change in business models. As a result, I believe COVID-19 gave a 20-year push to direct-to-consumer activity.
COVID-19 also showed people that they can collaborate differently and sometimes more effectively online. In my previous life, I used to travel to NY once a month to meet people, make presentations and pitches in person. All those things I believe have changed forever.
This is probably acceptable for other sectors, but in FoodTech, there is a stumbling block as a lot of the startups work around sensory factors. We look at startups and say: “This is super interesting, but I want to taste it”. Many of the companies in our portfolio are really about the sensory experience. And at the end of the day, if you cannot experience it, it becomes a lot more complicated to invest. You have to be creative and find a way to bridge that gap.
Yoni Glickman leads FoodSparks® by PeakBridge, the European and Israeli seed-stage fund. He was previously president of Natural Solutions at Frutarom, acquired by IFF for USD7.1bn. Later Yoni became EVP at IFF. He was also the Founder of FoodNext Innovation Lab. He holds a B.A of Business Administration from the Hebrew University of Jerusalem.