November 15, 2022

By Michelle Pelletier Marshall, Global AgInvesting Media

This is one venture capital company that lives up to its goal of investing in the vision of its entrepreneurs, of those who exhibit the audacity and know-how to grow great companies with products or services that satisfy real needs in leading markets, like agriculture. This is Champel Capital of Israel, which has an eye on creating value and supporting innovative products that fundamentally change industry trajectories and bring about rewards for its investors, both financial and social.

Take for example its recent Series B investment in Aleph Farms, a company that has developed a 3D tissue engineering platform that grows real beef steaks directly from a healthy cow’s cells without killing the animal. This “slaughter-free steak” is designed to mimic the full meat experience with appearance, shape, and texture.

With a focus on tech innovation – whether that be in the medical or insurance industries, or across the agriculture sector – Champel has backed companies like Remilk, which seeks to disrupt the dairy industry by making real dairy products without using cows, and Clarifruit, which pioneered the first scalable fresh product quality control software.

And helping along this mission is location. Israel has become a global technological and entrepreneurial powerhouse, which is ranked seventh in the world by the Bloomberg Innovation Index – an annual ranking of countries that measures performance in research and development, technology education, patents, and other marks of technological prowess. Their own “Silicon Valley” – Silicon Wadi – is a region in Israel that serves as one of the global centers for advanced technology.

GAI News asked a few questions of Amir Weitmann, co-founder and managing partner of Champel Capital, to get a birds-eye view into its initiatives.

1). Champel speaks of “doing well by doing good”. Please explain this guiding principle further.

There are many ways of making money, some illegal and not so morally focused, but then there is making money through doing business with great companies that do great things for the world. Certainly, companies in the medical fields are like that, as are companies in agricultural and food, Agritech and Foodtech. These companies not only increase the output of food, which we need to feed the growing population, they create healthier, tastier food with less environmental impact.

For example, we invested in Aleph Farms and their cultured meat innovations, which in the future will make animals redundant in the food chain. This is “real” meat made directly from the cells of cows, without having to sacrifice the cow, and with the benefit of cutting 99 percent of the land use, along with using less water, energy, and reducing CO₂ emissions. With this, you have much more sustainable environment, and it’s better for the planet, and it’s better for us as human beings, so it’s a great way of making money.

Another company example in our portfolio is Remilk where they make milk without cows through precision fermentation. This is not pretend dairy; genetically speaking, this is “real” milk, and it was made without breeding, growing, and killing animals, saving the impact on the environment as well. This, we feel, is the moral way to make money where you are contributing to the welfare of mankind. These cutting-edge companies caught our eye (and our funding!) because they fit our model of “doing well by doing good”.

2). The company has invested in medical innovation and AI, why agriculture, and why now?

Why get involved in agriculture now? Because we are getting closer to that goalpost of 2050 and having to feed two billion more people by then. And the last couple of years – through COVID and supply chain disruptions – have illustrated that we need new solutions, new innovations, and a broader array of players in the sector. And since we want to ensure that our first priority of doing good for human welfare is met, agriculture and feeding the world is a natural investment for us.

Certainly, the process of feeding the world has been going on forever. For thousands of years, human beings have tried to better their agricultural yields, to create new crops, etc. But in our generation, the number of human beings is growing at a faster pace than ever, with people all over the world becoming wealthier, and people in the developing world adopting more and more Western patterns of consumption. That means that not only are there more people eating, but those people who are eating are eating more, and are eating healthier foods. We think that agriculture has not changed the way it should have. In other words, the digitalization and the modernization of agricultural production has not been as thorough and deep as we would have expected them to be.

At the end of the day, there are many reasons, but the reality is that the agricultural world is very, very traditional. There’s plenty of innovation that should have been more widely adopted so there is a lot of space to grow, to innovate, and to increase adoption of existing technologies. We need to have things that are efficient, simple, cheap, and affordable for everybody. This is why agtech solutions have a significant place in our portfolio.

We also have an advantage being in Israel, which is at the forefront of this innovation. It is quite an astounding country. While small in size – smaller than New Jersey and with a population of just over 9 million – it is per capita, the number one place in the world for VC, far above the U.S. The number of unicorn companies per capita in Israel is over five times more than the U.S., and the investment per capita in Israel in VCs is over three times more than the U.S. I think that the ecosystem in Israel is amazing and the opportunities numerous. The more people who know about this and participate in it, the better it is going to be for them, for us in the local ecosystem in Israel, and for everybody in the world.

3). Champel is up to 14 investments with three exits and two on the horizon. What factors during due diligence place a company on your radar, and what boxes need to be checked for an exit?

First of all, we place major emphasis on the team — the team is the most important. We want to see a team of people who are experienced, who have a clear plan, who have persistence and strength, and who also are knowledgeable in sales, and understand technology and the market.

Second, you need to be working in a market that is interesting, because if the market is too small, it’s going to be difficult to create value. Then of course, you need to have the product itself – the technology needs to be the best in the world, it needs to be defendable. That’s why we have a deep tech fund. In other words, we want to see that the technology we are investing in is the best around and it’s creating barriers to entry that are strong enough so that the company has a sustainable edge over time to create value for itself and for us.

3A). And then how would you decide when to exit?

Well, it’s not our decision to make. It’s a decision that the company must make. There are two options. One is to go public, depending on market conditions. The other option is if somebody comes in and buys out the company. With this option you have to weigh the possible options to grow in the future. You look to the future and might say, now is the time for the company to be sold because I don’t see it scaling, or it needs to be part of part of a wider organization. It’s a difficult decision, but it’s often better to sell now, cash in, and move forward.

It’s really something you must decide on a case-by-case basis. But the short answer is that you can’t give a one size fits all answer. 

3B). And is there an average time that you are invested in companies?

Well, we are a VC fund so it’s a seven-year fund where we have the legal right to increase the time of the fund twice by one year, which means it could be up to nine years from final closing. We’re talking about a long-term investment; we are typically looking at exit in five to seven years. We do not want to have very early exits unless something very good happens, because we want to create value, and creating value takes time.

4). You’re fund raising now for Fund II, which will invest exclusively in “deep tech” Israeli companies involved in disruptive technologies based on scientific discoveries that have a significant impact on our lives. Can you please explain more about the status and future of this fund and possibly others from Champel?

We made our first closing with around $30 million in January 2022, and we have another few months to raise capital. It’s not easy to raise money now because of what’s happening in the markets. Having said that, the reality is that the prices are much lower now than they were about a year ago. The VC index has gone down, in some cases by 50 to 60 percent, so we are investing in some cases at real bargain prices. At this point, sophisticated investors understand that the situation is now in favor of the investors because of the market, especially as we are long-term investors investing over the whole cycle.

Since the financial risk has gone up, it’s going to be harder for startups to finance their activities. Even clients are going to be more prudent in adopting new technology and spending money overall, and consumers are going to be more careful. For all these reasons, it’s even more challenging than usual to raise funds. But because in this market we can deploy capital at rock bottom prices, we are confident that we are going to do very well.

ABOUT AMIR WEITMANN

Amir Weitmann is an experienced licensed investment advisor and asset manager who has been involved in asset management since 2004. 

From 2010 to 2017, he served as a senior investment advisor for Bank Hapoalim, Israel’s largest bank. In 2017, he established Champel Capital with Arié Benguigui to harness the power of Israeli technology investments.

Weitmann holds a BA and an MA in International Relations from the Geneva Graduate Institute of International Studies, and the Hebrew University of Jerusalem.

– Michelle Pelletier Marshall is contributing editor and author for HighQuest Partners’ GAI News and Unconventional Ag, and managing editor for its WIA Today blog. Additionally, she is the company’s Senior PR/Media Manager. She can be reached at marshall@highquestpartners.com.