With their first raise not yet over, Israeli start-up Steak Tzar Tzar’s chief executive, Dror Tamir, says he is “overwhelmed” by the attention his grasshopper protein company is generating.
“We’ve already gotten a call from Whole Foods, [dozens] of farmers in Africa, orders from north American processors,” he told Agri Investor in a phone interview. The Israeli government is even pitching the start-up at Davos, as an example of the country’s entrepeneurial innovation, Tamir said.
Trendlines Agtech, an Israeli government-franchised agri start-up incubator and part of the venture capital arm of agriculture and medtech group Trendlines Group, will be its first investor.
Trendlines committed an undisclosed amount to the $500,000 raise this month. The firm is looking for a co-investor, with a Singaporean and Russian fund both reportedly interested in the position. Trendlines itself launched a $17.6 million IPO on the Singapore Stock Exchange at the end of last year.
The raise may seem small, but Tamir said the name of his first backer is itself high value – Trendlines Agtech is one of only 24 government-licenced incubators.
Steak Tzar Tzar still needs to get off the ground commercially. It plans to target two markets: the protein sports drink and protein bar market in the US and Europe, and markets that already eat whole bugs as part of their diets, in Asia, Africa and the Middle East.
The US has a home-grown cricket powder market, with US protein bar brands attracting financing from the likes of Twitter investor Tim Ferriss. But grasshoppers, which Tamir says are even more nutritional, are less common and “too expensive” on the US market. He also thinks that getting into the sports drinks market will open up the doors to higher profits:
“Most of this market is based on whey, which means on the basic level you get saturated fat and cholesterol, lactose and salt, which are things that the athletes don’t really need or want, and grasshoppers just don’t have,” Tamir said.
Its first outside investment will be used to scale up its secret farming method to semi-industrial scale and kick off sales in North America. Tamir said his way of producing grasshoppers will mean that the insect powder can be produced up to 80 percent cheaper than the current US market price, and sold to the multibillion dollar sport protein drinks and protein bars.
Dror is also looking to franchise his farming technique in other parts of the world – particularly in countries where insects are already part of the diet, including in Asia and Africa.
“We look for companies that focus on the development of new technologies. There needs to be a huge demand in the marketplace, and although we are in Israel they must address an international need,” Trendlines’ vice-president of business development Sarai Kemp told Agri Investor.
In general, Trendlines Agtech invests in four to five new companies each year, with an average investment worth about $1.2 million. They also describe themselves as “intense” investors, giving each portfolio company business, tech, finance, marketing and administrative support. They aim to have 70 percent of their portfolio companies succeed in securing follow-on investment and further growth, said Kemp.
The idea came from Tamir’s most recent success – his company Plate My Meal, which makes plates that divide up the healthy nutrient content of a meal on the plate. It was designed to help parents plan and educate toddlers to eat nutritionally balanced meals, but Tamir also found himself being contacted by businessmen in countries where malnutrition was a problem.
“I started to realise that lack of protein is a big issue. Lack of development mentally and physically and can affect the immune system for life – I stumbled upon insects and eventually decided that grasshoppers are the best solution for that,” he said.
Steak Tzar Tzar takes its name from the Hebrew for cricket, pronounced tzar, but Trendlines sees a long term future for grasshopper protein in more technologically advanced foods like the creation of products that taste and look like beef or other farm animal produce.
Dror is bold about his progress so far: he said that already there has been so much interest from Africa that the Israeli embassy in Kenya is helping them coordinate with potential clients and business partners to use their innovative farming method.
“What we liked about Steak Tzar Tzar is that it addresses two markets, one in developing countries and one in developed countries … It is in an industry where in the future we will need more protein sources, and [grasshopper protein is] very cost effective and has high nutritional value.”