SE Asia to embrace agritech first, foodtech later, says Sirius Venture’s Eugene Wong

Eugene Wong at DEALSTREETASIA's Asia PE-VC Summit 2016 in Singapore.

While food technology (foodtech) and lab meat are becoming the trend in Israel and the United States, Southeast Asia can also tap into the revolutionary clean food space by exploring the vast opportunities in agricultural technology (agritech), according to Sirius Venture Capital founder and managing director Eugene Wong.

Singapore-based Sirius Ventures is focused on startups in the foodtech and logistics space, with funding size of between $100,000 and $600,000. Recently, the venture capital fund backed an $8-million Series A funding round in Israeli foodtech firm Genie Enterprise, which has invented an automated computer-controlled cooking device.

It also made a strategic investment in Israeli biotech and foodtech startup SuperMeat’s seed funding round, which raised $3 million.

Wong said it will take long before foodtech explodes in Southeast Asia but venture capital firms can tap into the region’s growing agritech sector.

“I see more agritech in Southeast Asia than foodtech because farming is still a big component in the lives of Asians,” Wong said in an exclusive interview. “But the space is still neglected in terms of VC investments because there have not been sizeable exits in this space.”

DEALSTREETASIA spoke to Wong in Singapore to discuss the future of foodtech, lab meat, and agritech, and how Sirius Venture Capital is playing a role in these spaces.

Edited excerpts:

It seems that foodtech investments are more focused on Israel startups. How attractive is the Israel market for this space?

Israel is leading in the foodtech space because they have very disruptive, innovative foodtech companies borne out of the country’s geopolitics. Israel also has the talent pool and the people who understand the need to disrupt the food space.

I think Israel is food self-sufficient and in order to remain food self-sufficient in the sustainable future, the country has to keep innovating to manufacture food, find new ingredients, and move away from traditional farming and/or relying on imports.

In Singapore, which is an open economy, most of our food is imported. In Israel, they are producing their own food to become self-sufficient. This is exactly why Sirius has been active in foodtech investments in Israel.

Do you see this space continuing to grow in the coming years globally?

Yes, I think so, due to a few reasons. In the 1960s, people were saying that the population of the world will outstrip food production, resulting in a global push to only have two kids. This triggered the massive food production drive by the Americans to address global demand. However, most of the food currently produced is chemical-driven, GMOs, all genetically and chemically engineered.

Now, as people around the world become more prosperous, there is an acknowledgement of a growing trend of people wanting to eat healthy, original food. But this so-called organic food cannot feed the world. We are now used to fast food production. We cannot go back to the days when we were producing bananas or chicken in a slow manner. The world will go hungry.

Because there is an influx of technology in the fields of biomedicine and artificial intelligence, many of these technologies are now getting into food space. Many startups are now thinking of new ways to produce foods, to come up with new ingredients.

Foodtech will be a hot space in the coming years.

How do you view Southeast Asia’s potential in this space?

For Southeast Asia, I see more agritech than foodtech. There is a company in Indonesia that has a technology that can monitor and automate feeding of fish they farm. In Singapore, there is a company that uses vegetable farming while another is introducing indoor vertical fish farming. The region has a lot more agritech because farming is still a big component in the life of Asians.

While the region lags in lab meat or food production, Southeast Asia can still play a role in the global foodtech space through automation. Asians are good at machines, we are a manufacturing source for the rest of the world. Israel, the US, and Europe might come up with disruptive foodtech but Asia can take care of logistics, mechanisation, and automation.

In Southeast Asia, it will be agritech first, then it will slowly move to foodtech. It’s not to say that there won’t be any foodtech here. The space is very broad. Even vending machines can be considered foodtech and we produce that in the region.

Is the agritech space in the region already well-tapped by VCs?

It is still neglected. In Singapore, if we ask if there are VCs focusing on this space, I can only think of Sirius and another company. Partly because there have not been sizeable exits in this space. We still do not have the Grab, the Facebook, or the Alibaba of foodtech and agritech in Asia yet.

So, it’s hard for fund managers to raise funds to manage money to invest in this space. The industry is nascent and VCs will not be able to focus on this sector. What I am starting to see, surprisingly, is the growing interest of corporations in foodtech ventures.

A lot of companies, especially those who are operating in the food space, have units that invest in foodtech. Their corporate ventures are active in this space.

In the next five to 10 years, I won’t be surprised to see more interest from VCs and more companies becoming unicorns in the foodtech space here in Southeast Asia. But I think countries like China, Japan, and South Korea are already ahead in the game.

What challenges do you see in the foodtech space?

The first challenge would be the taste. People eat the food they want, even if they are told not to do so because their favourite foods are delicious. For foodtech to be successful, the end product must be as tasty as the current option.

Second, the cost can be a challenge. Can we bring down the cost of lab-produced meat to the same price of ordinary meat sold in markets? Maybe in the future, when farmlands are being pushed further away from the city, which means it will be more expensive to deliver food from the farm to the market or households.

Government regulation is also a challenge. How can governments regulate these new foods? Can lab meat be considered food or a medical product? When governments do not understand something, they usually put a stop to it. They cannot. They have to see and understand and embrace foodtech.

Sirius is also investing in China. What are the sectors you find attractive in the country?

We invested in a logistic technology (logtech) startup called Lalamove because one sector in China that I find very exciting is the logtech space. And logistics is still related to foodtech. Logtech is going to revolutionise how people get their food.

You don’t have to go to a restaurant or a cafeteria or a supermarket to get your food. Foodtech lets you order your food online and just wait for it to arrive at your doorstep. And how can foodtech firms do that? They would need logistics partners.

Currently, most of us still get our food the traditional way. That has been a way of life ever since. But in the future, foodtech and logtech will change that.

Finally, how can Sirius Venture Capital play a part in the food revolution?

The global food revolution is coming in the next 20 years and Sirius will continue to invest in this space. We have this opportunity to play a small part in this whole food revolution and Sirius is doing it for the next generation, my children’s generation.

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Singapore’s Sirius Venture backs $3m round in Israeli food-tech startup SuperMeat