I had the opportunity to talk to Roee Nir, CEO and co-founder of Forsea. Forsea is producing cultivated seafood, starting with cultivated eel. Prior to Forsea, Nir headed the business development for a biopharmaceutical company in immunology. We chatted about the differences between cultivated meat and cultivated seafood, customer preferences, navigating the regulatory environment, the foodtech ecosystem in Israel, and how startups raise money in Israel.
J: Why is eel your first product?
R: We start with eel because our strategy is to target highly priced fish with real market demand that is unmet and endangered species. The place that we go to look for the endangered species is the IUCN Red List and eel was answering these criteria quite significantly because eel has declined 90 to 95% in recent decades and the wholesale price is between 60 to $75 per kilo. Just to understand how big the market need is, Japan, for example, consumed about 160,000 metric tons in the year 2000. Now, they consume around 14. So, there is a big gap between the demand and the current supply and for us that was a no brainer to tackle this market.
J: How did you as a founder become passionate about this problem?
R: We are in the center of a revolution. Looking at fish and seafood, the demand for them is expected to double by 2050. Already now, less than 7% of the fisheries are being fished at levels below sustainability. Aquaculture has its own environmental and food security issues. There is a great need to close the supply and demand gap.
J: Israel is very strong and cultivated meat, especially because there are a lot of people that don’t eat meat here. How do you see differences in the development of cultivated meat vs. cultivated seafood startups?
R: Cultivated meat had some background from medical research related to tissue engineering and organ substitutes and so on. The challenge was taking it from that vertical into the right applications in the food. For fish, there was no research and every cultivated fish and seafood company is doing very basic research because the cells develop differently. Each of us is more or less targeting different markets at the beginning (tuna, scallops, shrimp, etc) which require their own modifications. There are some ancillary companies joining the ecosystem related to cell line development, scaffolding, growth factor developments, contract manufacturing, piloting, etc for cultivated meat.
J: So when the Kitchen came to you and approached you with the idea of this startup, and they already had the technology, what was that technology based on?
R: We are a completely different company than any other cultivated company. Almost all cultivated meat companies do more or less the same thing, they will go to a certain source of stem cells and use a technique called directed differentiation to grow the cells. Then the cells have to communicate which they do by using a scaffold where the cells are seated on the scaffold pre-maturation. This is used as a building block of the tissue.
What my co-founder Iftach Nachman discovered is a technique to take important stem cells which are cells that have the potential to differentiate to any type of cell. And these are usually being created only when you have a fertilized egg. So you have a fertilized egg that doubles to two to four to eight, and so on. These cells upload but they have the potential to differentiate to any type of a cell. He found a technique to take these cells and to aggregate them into a special form called an organoid and give these stem cells the feeling that they are in the early stage of their own development. What happens is that these cells start to grow as if they weren’t each. They grow into many tissues that are naturally composed of edible pieces.
So we barely use growth factors. We do use some growth factor to direct this organoid tissue to have the composition that we want, but it’s a very minimal usage compared to the directed differentiation methodology. Then these many tissues of this organ start to develop autonomously up to less than a millimeter before we start building tissue from it.
And by this method, we are tackling the largest challenges of the cultivated meat space. We eliminate the scaffolding stage because each one of these organoids is its own connective tissue. They communicate together and we don’t need to synthetically put them on a scaffold. We also simplify the production process so we are much more scalable. These advantages allow us to bring our product to plate faster and reach price parity faster. Also, the tissue is more natural in the way that we manufacture the cut.
J: When do you expect that consumers will be able to try your seafood?
R: We are in the R&D phase and are planning to launch the first product to market at the end of 2025.
J: When a new product enters the market here in Israel, especially food tech, what kind of adjustments do you have to make toward customer preferences?
R: The final product that we launch will probably be more suitable for the Asian territories. As a company for our product of eel, we would want to do the market adaptations in Japan, not in Israel. I think that overall most companies are going to try Israel or Singapore as a test country but we are all aiming at selling globally. Because our industry is an industry that requires a lot of CapEx and we need markets that justify such an investment. Our vision is that our first launch would be in Asia.
J: With this product, what kind of regulation or intellectual property protection challenges do you have to navigate?
R: The first wave of companies has to face two aspects. One is regulation, and the other is market education. The way is being paved by them for us. Any company that is getting the approval, it’s a very big advancement. I’m quite confident that our process will go through there quite smoothly as any cultivated meat company. From an IP perspective, everything that we do is completely innovative. We are submitting a few provisionals these days, based on the research that we generated in our lab. But really everything that we do is very innovative and this is how we protect ourselves.
J: There are probably a lot of challenges as a first mover entering the market, especially around customer reception. What are the other challenges associated with developing not just a technology, but also a business that has to have customers?
R: First, every consumer research that has been done says that the most important thing in the product is taste. So it’s on us to deliver a product that is high quality. From a market perspective, we, as a company, do not plan to be the ones that are marketing the product. For example, now we are looking for strong partners in the different territories that we target to partner with to make the right market adaptations to the target market. And also such companies which are seafood manufacturers and seafood traders that already have their own relationships with the restaurants and the retail stores. They will be the ones that will take the path of introducing the product into the market. That’s our strategy. Specifically with the eel, more than 80% of it is being sold in restaurants and that’s also our strategy: to start with the restaurants and then expand to the stores.
J: Are there any other food tech companies from Israel or from other places that you really admire for their innovation or their business strategy?
R: I think that Aleph is doing amazing work. I love their strategy. I love their technology and I think that it’s very well managed. I love the technology of Imagindairy also, they have very deep technology for the milk space. Also mushfoods, it’s a hamburger that’s 50/50.
J: It sounds like the startup ecosystem here within food tech is very well connected. Would you say that the ecosystem here is generally a very close-knit and supportive community?
R: First of all, in cultivated meat, no one needs to speak now on competition. Even the ones that are very soon going to launch their products, the market is still big and everyone is still starting. Everyone should collaborate in order to help us all bring this industry up, as long as it doesn’t interfere with the IP of others.
As part of the larger ecosystem in Israel, we all collaborate. We are Israelis and we are very communicative within ourselves. We like to meet, we like to share ideas, and we love that this is a very central industry that is erupting from Israel. We also share investors. Sharing investors is a very connective thing.
J: And you talked about investors, so what is it like raising money here?
R: So many of us, certainly all the companies from the Kitchen, have received Israeli Innovation Authority funding. We had to go through a very rigorous application and many meetings and once we were approved to be financed by the Israeli Innovation Authority and by the Kitchen, we were given 3 million shekels ($900,000). And it’s a very smart thing to do from the government’s point of view because it’s their way of incentivizing innovation. Then you have to start raising and from the earlier stages you can probably target angels as well. But most of my investors are Vc’s and only one angel. My preference is either VC’s or CVC’s, professional investors that not only know the business but support additional fundraising in the next stages, networking, etc. There are less investors in Israel than US or Europe so more investors are American or European. But there are also Israeli VC’s that have started to be more interested.
J: You mention corporate venture capital, is that very common here?
R: It is a source of funding. Of course, VC’s are more active, and naturally, there are much less CVC’s and their process is much longer and they are more conservative. For the relevant companies, it’s there. There are less investors in Israel than US or Europe, so more investors are from US or Europe.
Joy Chen is a contributor at the Spoon and has been writing about robotics and alternative proteins for the past year and a half. Although originally from the United States, she is currently studying at Tel Aviv University in Tel Aviv, Israel.
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