ICL’s Planet Startup Hub is dedicated to investing and forming strategic partnerships with the most promising startups, particularly in key sectors such as Agtech, Foodtech, and Climatech solutions such as energy storage, battery safety and novel materials. By providing resources, expertise, and practical support, we help bring innovative ideas to market.
AgriFoodtech and Climate are among the fastest-growing sectors, attracting some of the world’s brightest and most visionary founders. Yet, with so many disruptive concepts, selecting the right investment selection targets requires a rigorous, proven approach.
This article explores how Planet Startup Hub identifies strong contenders, ensures that they are the perfect match for ICL’s own strategic goals, and evaluates their true potential according to proven investment selection criteria.
Defining Strategic Alignment
ICL operates with a clear vision for a sustainable future, aligned with the United Nations’ Sustainable Development Goals (SDGs) and the FAO’s Four Betters Framework. The Four Betters focus on creating a more sustainable and equitable future through Better Production, Better Nutrition, Better Environment, and Better Life.
These pillars emphasize improving food systems, reducing environmental impact, and enhancing the well-being of communities worldwide. While focused on long-term profitable growth and market expansion, ICL adheres to strong ethical principles.
Startups that align with ICL’s broader strategic goals and values are prioritized. This alignment includes industry focus and future market relevance:
- FoodTech
- AgTech
- Energy Storage
- Battery Safety
How to Choose Investment Targets
As part of the evaluation process, ICL will consider the potential for long-term synergy with a new startup (or even a raw concept). It’s vital to identify partners that can integrate with existing ICL business units or align with future growth strategies. There needs to be a strong initial match that amounts to a “meeting of minds” between both partners.
An example might be investing in a startup that is developing a unique AI process for food ingredient discovery. It’s built around technologies that ICL’s own scientists and researchers can readily evaluate, and the concept is directly aligned with ICLs focus on innovation in clean-label food production. The company has already invested in similar startups and its business units have the experience and the specialist knowledge to ensure a smooth and speedy journey to market.
Evaluating Market Potential
A key factor in investment selection is understanding the market opportunity, which requires an in-depth analysis of the current landscape, growth potential, and evolving customer demands. Investors and founders must analyze:
- Market Size and Growth: Understand the current market size and projected growth trends.
- Customer Pain Points: Determine if the startup addresses critical and evolving market challenges.
- Competitive Landscape: Evaluate whether the startup can carve a niche and sustain a competitive edge.
A robust understanding of economic trends, consumer demand, and competitive threats ensures the startup’s solution has real market relevance and staying power.
Assessing Technological Advantages
The essence of innovation lies at the core of ICL’s selection process. Startups must demonstrate technological differentiation: technology that is innovative, scalable, and difficult to replicate. This advantage provides a strategic edge, enabling startups to stand out in competitive markets.
Conducting thorough intellectual property due diligence during a startup evaluation is critical to ensure the technology’s uniqueness, protectability, and freedom to operate, as well as to mitigate risks of infringement or disputes that could impact the investment’s value and scalability.
Founding Team and Leadership
Evaluating the team’s skills and leadership in an early-stage startup is paramount, as their vision, adaptability, and execution capabilities are often the strongest indicators of the startup’s potential to navigate challenges and achieve scalable growth. There may be a public perception that successful startup founders are young, tech-savvy innovators, but the majority of startup entrepreneurs are individuals with decades of solid practical experience in their respective fields.
Building a successful business requires not just practical experience but also deep expertise and an understanding of the ecosystem. Investors (generally) prefer to identify founders with a track record of proven success in their industry and a reputation for competence and professional integrity.
Investors need to probe the team’s vision and capabilities to translate an exciting idea into a profitable business. Not everybody has the ability – or the persistence – to execute a business plan. Investors sometimes need to be tough with founders when it comes to team membership, whether that means reassessing roles, replacing team members who may no longer fit, or providing additional mentorship to strengthen the team’s capabilities.
The fact that someone was an early contributor to a venture doesn’t automatically mean that they are qualified to continue. A consideration that is often overlooked is the ‘cultural fit’. It’s very difficult to forge a successful long-term partnership if there is a fundamental cultural dissonance. The startup’s culture has to align with your corporate values and work ethos.
Financial Health and Business Model
Every investment is ultimately a calculated risk. The more thorough and accurate the financial planning, the lower the risk. One of the first assessments is the revenue model. Investors need to be satisfied that it accurately demonstrates sustainability and growth potential.
The revenue model goes hand in hand with the initial financial projections and these require a cold and objective appraisal by experts. The accuracy and realism of the projections may need to be modeled against a variety of market scenarios.
If two terms cause startup founders sleepless nights, they are burn rate and runway. Burn rate refers to the speed at which the startup burns through its investment capital before it makes a profit. Runway is the length of time the fledgling business can survive before its resources are exhausted. Investors need to be crystal clear about the startup’s burn rate and runway to understand its financial stability and survivability.
Assessing Technology and Innovation
We already explored the need for technological advantages in startups, but it’s worth some additional focus on the inherent risks that come with innovative technologies. The most obvious risk is that the new technology simply won’t work as intended, or may be obsolete or outpaced by competitors. It can take 7-10 years to bring a new product to market and a decade is sometimes an eternity during a fast-paced technological revolution.
There’s also a danger that a particular market may not develop as anticipated. Consumer preferences can be fickle and hard to predict, and that’s before you factor in the health of the economy and the performance of supply chains. Operational risks can include something as simple as a sudden rise in the price of key materials or components, commodity shortages, and unforeseen difficulties in scaling operations.
Environmental, Social, and Governance (ESG) Considerations
ICL has a deep and longstanding commitment to ESG principles, with robust inbuilt processes and innovative tools. Understanding a potential partner’s sustainability impact and their ability to contribute to sustainable development is essential, particularly in sectors such as energy and AgTech. Equally important is evaluating the startup’s broader societal impact, including job creation and community development.
Founders who are deeply focused on technological innovation, business planning, and securing financing may not always prioritize ESG and social responsibility. Early-stage communications present a valuable opportunity to assess the startup’s receptiveness to ESG principles and their ability to align with the corporate partner’s values.
In addition to broader ethical considerations, investors must carefully evaluate the startup’s governance practices, focusing on transparency and accountability. Strong governance needs to be ingrained in the company’s DNA from the outset.
Exit Potential
While startups aim to disrupt markets and make a positive impact with life-changing products, their ultimate goals are growth and profitability. It’s never too early to assess a new venture’s exit potential.
This medium-to-long-term strategic direction includes key pathways such as mergers and acquisitions (M&A). If a startup demonstrates strong potential as an acquisition target—either for your company or others—it can offer a significant return on investment.
Some of the most successful startups quickly evolve into public companies, achieving listings on major global stock exchanges. IPO readiness should be an ongoing focus for both investors and founders, factoring into all strategic decision-making processes.
Another important consideration during the investment selection process is whether the startup and its backers possess the flexibility and resources to pursue strategic acquisitions. Such acquisitions can help penetrate new markets, enhance scalability, or mitigate competitive threats.
Investor Traction and Syndication
Startups don’t always approach investors at the concept stage. Many are already seeking acceleration rather than incubation and may come with co-investors in place. The quality and reputation of these investors are critical considerations.
If co-investors do not align with your core values, strategic vision, and commitment to ESG principles, friction is inevitable. The same evaluation applied to the startup’s founding team should extend to all co-investors and stakeholders.
As part of the financial due diligence process, a detailed analysis of past and current funding rounds is essential. These evaluations provide valuable insights into the startup’s valuation, market confidence, and the business acumen of the founding team. When you consider how to choose an investment, it’s worth factoring in the potential benefits of syndicating the investment with other strategic or financial investors. Maintaining a flexible approach to the investment process can offer additional advantages.
Conclusion
ICL’s Planet Startup Hub is committed to identifying and supporting the most innovative startups in AgTech, FoodTech, Climatech, energy storage, battery safety new materials, and recycling. By focusing on strategic alignment, market opportunity, technological differentiation, leadership strength, financial health, ESG considerations, and exit potential, we ensure that every investment drives sustainable growth and delivers measurable impact.
If you are an innovator or a founder with a disruptive concept and a vision aligned with ICL’s strategic goals, the Planet Hub Startup Program is your opportunity to shorten your path to market, overcome challenges, and realize your full potential. Together, we can create a resilient and sustainable future.
The post Choosing a Winner: How Do We Select Our Investment Targets? appeared first on ICL Accelerator - Planet Startup Hub.