Solution Nation: One Nation is Disproportionately Responding to the World's Most Intractable Problems

By David Wanetick

Solution Nation contains fascinating and rigorously researched profiles of 62 of Israel’s most promising companies. In addition to developing and commercializing cutting-edge technologies, all of the companies included in Solution Nation are dedicated to solving intractable challenges. Learn how the world’s most disadvantaged and destitute people stand to benefit from Israeli ingenuity. Readers are introduced to Israeli companies that are detecting cervical cancer and heart failure, preventing amputations and auto accidents, helping the blind see, enabling the paralyzed to stand, purifying water in the wake of natural disasters, taming starvation, and rescuing people from burning buildings.

• Language: English
• Publisher: Business Development Academy
• Release date: Mar 21, 2018
• ISBN: 9780999855423

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Wanetick

Copyright © 2018 David Wanetick.

Business Development Academy

P.O. Box 30423 Walnut Creek, CA 94598

609-919-1895

Business Development Academy

All rights reserved. No part of this book may be reproduced, stored, or transmitted by any means—whether auditory, graphic, mechanical, or electronic—without written permission of the author, except in the case of brief excerpts used in critical articles and reviews. Unauthorized reproduction of any part of this work is illegal and is punishable by law.

ISBN: 978-0-9998554-0-9 (sc)

ISBN: 978-0-9998554-1-6 (hc)

ISBN: 978-0-9998554-2-3 (e)

Library of Congress Control Number: 2018901143

Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

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rev. date: 03/01/2018

This book is protected by the copyright laws of the United States of America and of other countries. The scanning, uploading, electronic storing and distribution of any part of this book without the author’s express written permission is a theft of the author’s intellectual property. Reproduction of this book, in whole or in any part, by any means (including by email and photocopy) is strictly forbidden. This includes companies featured herein making copies of their company profiles. The author offers a $10,000 reward for information regarding a copyright violation of this book which leads to a conviction or settlement. If you are aware of copyright violations, please email [e-mail].

No Liability

The author is providing this book and its contents on an as is basis and makes no representations or warranties of any kind with respect to this book or its contents. The author does not represent or warrant that the information contained in this book is complete or current. Nothing in this book shall be construed as investment advice. The author renders no opinion on the merits of investing in companies mentioned in the pages that follow. Readers must undertake their own analysis and confer with competent investment professionals in connection with their considering to invest in any of the companies mentioned. This book is not a substitute for consulting with capable professionals regarding the ideas presented in the following pages. Neither the author nor anyone involved in publishing this book will be liable for damages arising out of, or in connection with, the use of the concepts or strategies this book presents. Use of this book implies your acceptance of this disclaimer.

Testimonials

I really enjoyed reading Solution Nation. The problem-solution-discussion format uniquely crystallizes the technical challenges and demystifies complex science into easy-to-understand solutions. The management discussion questions not only serve to guide critical thinking of the instant technologies but also serve as informative examples of the kinds of questioning useful in developing technical insights around new technologies that a Technology Scout will find most instructive. Superb analysis was brought to bear in the pages of Solution Nation.

H. Brock Kolls

Founder & Chief Open Innovator, TechConnectHub.com &

Vice-President of External Technology Acquisition (former)

The Coca-Cola Company

As this book so clearly documents, Israel is a world leader in technology-based innovation. As someone who has started several successful software companies, I recommend this remarkable account of the Solution Nation to anyone interested in entrepreneurship in the technology space. A very well-written account of intriguing Israeli companies, peppered with excellent analytical insights.

Mark Braunstein, MD

School of Interactive Computing

Georgia Institute of Technology

Israel is unique on planet earth in creating the environment that fosters so many new businesses that are exploiting revolutionary technologies directed towards many markets. Solution Nation provides an in-depth review of truly amazing businesses. Each profile was methodically researched and articulately presented. Readers from a variety of walks of life will enjoy the stories that await.

Bart Stuck

Managing Director

Signal Lake Venture Capital

Solution Nation provides a unique opportunity to learn about some of Israel’s most promising start-up companies that are dedicated to delivering real solutions to the most deprived people on the planet. David Wanetick explained each technology in an engaging and educating fashion. A truly wonderful book.

Benjamin Peng

Co-Founder

Yafo Capital & Israel Plan Organization

A true tour de force in research and critical thinking. David Wanetick once again demonstrated that he is a brilliant analyst and a masterful writer. Readers are in for a treat.

Andrew Pickup

Chief Executive Officer

The Wall Street Transcript

David Wanetick’s Solution Nation is essential reading for busy investors who want to get to know some of Israel’s high-tech companies at a glance. Wanetick distills the most important details about 62 companies in Israel that are providing world-changing solutions. He has a real knack for sifting through the startup chaff and picking out just the data points investors need to make smart decisions. His questions at the end of each section are the kind elite investors should ask when profiling an innovative startup. Don’t invest in Israel without first investing in this important guide.

Brian Blum

Author

TOTALED: The Billion-Dollar Crash of the Startup that Took on Big Auto, Big Oil and the World

The aptly-named and thoroughly-researched Solution Nation is a tribute to the powerful creativity and inventiveness of Israeli scientists and entrepreneurs. It is a must-read for prospective venture capital investors looking for the next big thing, as well as governmental and foundation professionals seeking answers to a variety of intractable medical and environmental problems afflicting the world. Packed with powerful and practical insights.

Adam K. Stern

Chief Executive Officer

SternAegis Ventures

Solution Nation beautifully illuminates dozens of cutting-edge technologies championed by Israeli companies for the benefit of disadvantaged people throughout the world. David Wanetick rigorously researched the problems the featured Israeli companies are addressing. His questions to management will help even seasoned investors sharpen their analytical skills. Complex subjects are elegantly distilled into easily understandable stories that will be enjoyed by all readers.

Itai Horstock

Managing Partner

Sherpa InnoVentures

Solution Nation provides an exciting collection of profiles of dynamic Israeli companies—each one dedicated to remedying a severe problem confronting humanity. The book is extensively researched and provides deep insight into the featured companies. Solution Nation is destined to become the topic of much conversation.

Simon White

Chief Executive Officer

Australia-Israel Chamber of Commerce

Solution Nation is a remarkable review of an extraordinarily diverse array of technologies. David Wanetick does a great job of summarizing both the problems addressed and solutions proposed by each company reviewed. His incisive questions for management should help investors elevate their analysis. Solution Nation would be great reading for MBA students who would glean critical insights into issues surrounding a broad array of emerging technologies.

J. Todd Abrams, PhD

Senior Director, New Ventures and Business Development

Temple University

Solution Nation bursts with interesting business insights and profiles of Israeli entrepreneurialism. Everyone has much to learn from Solution Nation; I was simply inspired. I will surely keep this work in mind in the years ahead as I contemplate business and investment opportunities.

Amir Weitmann

Managing Partner

Champel Capital

In Solution Nation, David Wanetick lights up the booming technology and start-up scene in Israel by documenting examples of 62 technology companies. Solution Nation brilliantly delves into the most challenging real world problems and potential solutions being developed by Israeli ingenuity in the fields of medicine, food security, clean tech, energy, transportation and more. I loved the diversity of examples as well as the problem/solution/discussion with management structure of the material presented. A fascinating read!

Eric Kadyrov

Executive Director

Crossbridge Capital

David Wanetick’s sixth book, Solution Nation, is an interesting read for students, startups, private investors, policy makers, and anyone interested in innovative entrepreneurship. Wanetick presents detailed profiles of 62 Israeli startup companies using an interesting format of problem-solution-discussion—suitable for case studies for students, entrepreneurs and investors.

Dr. Gil Avnimelech

Associate Dean for Research and Founder of the Entrepreneurship Center,

Faculty of Business Administration,

Ono Academic College, Israel

Solution Nation provides insight into a broad spectrum of Israeli innovation, giving the reader a taste of Israel’s vibrant entrepreneurial ecosystem. It’s clearly challenging to cover the full gamut of Israeli innovation in one book, and the author did a fine job selecting unique examples from the immense innovation pool in this small country. Solution Nation makes me proud both as an Israeli and as a technology investor.

Guy Horowitz

Partner

Deutsche Telekom Capital Partners

Solution Nation should be required reading for anyone leading an innovation-driven company. The author methodically approaches each described problem and elegantly explains the proposed solutions. In the Points for Discussion with Management sections, David Wanetick brings laser-like focus to the pivotal issues confronting each featured company. Highly recommended.

Zacki Turkeltaub

Global Managing Partner

GlobalClose Alliances

Solution Nation expertly profiles Israeli technologies that are addressing some of the most pressing global issues. This book will help broaden public opinion on the importance of fostering an innovation ecosystem as Israel has so successfully achieved in a short time. While often being showcased for its creation of mobile, Internet and enterprise technologies, Israel has also developed an advanced life sciences industry which is on full display in Solution Nation. For generalist readers interested in technology, this is a very insightful read. The author’s forensic analysis and dissection of each company’s solutions and business models are valuable blueprints for the venture capital community.

Ben Weiss

Managing Partner

CE Ventures

Dedication

To my children ~

Daniel, Zoe and Zachary

Never be afraid to ask questions.

Never go to sleep until you learn something.

Previous Books by David Wanetick

The Strategic Negotiator: A Manual for Negotiating at the Elite Level

Business Model Validation: What Makes Business Models Work?

The Power of Incremental Advantage: How Incremental Improvements Produce Dramatically Disproportionate Results

Hot Sector Investing: Profit from Over 100 Emerging Opportunities

Bound For Growth: How to Pick Winning Stocks Using Industry Analysis

Note on Personal Pronouns

I find it unfortunate that if Neil Armstrong made the maiden moon landing in contemporary times rather than in July 1969, the storyline would have been that Neil Armstrong is a misogynist.

Trademarks

It is the author’s understanding that the following terms have been trademarked in at least one jurisdiction, or registration thereof is being pursued.

Solution Nation™ - David Wanetick

80RT-IL™ – MercuRemoval

Asufa® – Amaizz

Eyes-On™ – Foresight Automotive

GALMOBILE™ – G.A.L. Water

GuardKnox Communication Lockdown™ – GuardKnox

Hanging Adjustable V-Shaped Pond™ / HAVP™ – Univerve

Natural Biological System™ – Ayala Water & Ecology

ReDS™ – Sensible Medical

Author’s Letter to Readers

Dear Reader,

On the pages that follow, I will introduce you to 62 Israeli companies. Many of these companies are developing innovative solutions for detecting and curing life-threatening diseases. Others are dedicated to provisioning malnourished people with food sources that are both replenishing and ecologically sound. Some of the companies profiled in the following pages have developed cutting-edge technologies that enable the purification of contaminated water. You will also read about Israeli companies that provide protective equipment to first responders of nuclear meltdowns, track down terrorists, reduce fatalities at construction sites, prevent automobile accidents as well as rescue people from forest and building fires. You will have the opportunity to read about companies developing clean energy and remediating the environment.

There are three parts to each of the 62 company profiles that await you. First, I describe the problem each company is addressing. If nothing else, I hope you will learn something about diverse topics such as hydrocephalus, influenza, drones, grasshoppers, mosquitoes, aquaculture, prawns, cervical cancer, bovine embryo implants, locked-in syndrome, retinal and dental implants, mercury, phytoremediation, maritime piracy, combatting fruit flies in India, raising and processing baby chicks, stereovision cameras, recycling cardboard and much more.

Second, I discuss the solutions that each company has developed (or is developing). I explain how each solution works as clearly and richly as I can. Inevitably, some readers will clamor for more detail while others may wish to skim over these sections. There should be no shame in skimming selected (self-contained) sections of the book. A broad array of technical solutions to intractable problems are presented in the ensuing pages; not every reader will be equally interested in learning about all of them.¹ In any event, I tried to add color to the ingenuity behind the solutions as well as shed light on the obstacles that may arise in delivering these solutions to the market.

Third, I concluded each company profile with a section called Points for Discussion with Management. In this section, I provided hard-hitting questions that potential investors, business partners, or customers may wish to pose to the management teams. Most of these questions should remain relevant in the years to come. In almost all cases, the questions posed to one company are suitable for many of the companies featured in these pages. I hope that reading all of the questions and analytical issues raised in these pages will further sharpen your analytical skills and enable you to make even better business and investment decisions.

In hopes of keeping you as engaged as possible during our journey together through the ensuing pages, I prepared one question for you to answer relative to each featured company. After reading each company’s profile, you are invited to visit the questionnaire in Appendix A. Responding to each question requires you to do no more than to place a checkmark next to each question indicating that your answer is Yes, No, or Don’t Know. Finally, a discussion relative to how Solution Nation came to fruition—including topics such as how the featured companies were selected—can be found in the interview of me in Appendix C.

I remain,

Image1.jpg

David Wanetick

P.S. My writing of Solution Nation coincided with efforts around the world to boycott Israeli products, to divest from companies conducting business in Israel, and to sanction Israel. (This movement is referred to as Boycott, Divest, Sanction or BDS, for short.) I wrote a section that appears at the end of this book entitled Dalliances with Divestment. This section is for those of you who are interested in the BDS issue but are unsure which side to take or are leaning towards supporting BDS; the Dalliances with Divestment section is designed to cerebrally work through the merits of supporting or opposing the BDS movement.

I would like to reserve the section called Dalliances with Divestment for a conversation between those readers considering joining the BDS movement and me. I ask those readers already entrenched in a position on BDS, or who are indifferent to BDS, to respect our privacy by refraining from reading that section of Solution Nation.

Israeli Companies

are Working Towards

Food Security

Enhanced Milk Production Techniques

from the Land of Milk and Honey

Are you ready for a riddle?

Milk is crucial for the development of human bodies but cows are harmful to the environment. Dairy farmers must make money but the milk production business is extremely challenging. There is an inverse relationship between a cow’s fatigue and the quantities of milk she produces. The more milk she produces, the more difficulty she has getting pregnant. Cows are fairly fragile creatures; stress them too much and their deterioration is usually irreversible. So, how can more milk be profitably produced without harming the herd or contributing to global warming?

Since any particular cow emits essentially the same levels of methane and ammonia regardless of how much milk she produces, dramatically improving the milk output per cow means fewer cows will be needed. Applying the collection and computational properties from the Internet of Things and Big Data, a company from the land of milk and honey is championing the technology to boost milk output per cow. Afikim, Israel-based Afimilk deserves some of the credit for Israel having the world’s most productive cows; on average, each Israeli cow produces 12 tons of milk annually, roughly double the output achieved in Australia and Germany.

Before we delve into the solution to the riddle presented above, let’s take a closer look at the riddle.

Why is Milk Important in Our Diet?

Milk provides 16 essential nutrients that help nourish healthy bodies and minds, by far more than any other natural beverage. Milk and milk products provide approximately 73% of the calcium—critical for strong bones and teeth—available in the food supply. The phosphorus found in milk helps the body absorb calcium. At least 3% of the content of milk is in the form of protein which builds and repairs body tissues and forms antibodies that help fight infections. Milk is also a significant source of riboflavin (vitamin B2) which helps promote healthy eyes. Milk’s lactic acid exfoliates skin, its enzymes help smooth skin and its amino acids help keep skin moisturized.

Milk is especially important for children as it is a nutrient dense food. For children too impatient to work their way through a plate of vegetables at one sitting, downing a glass of milk is a much more expedient way to ingest a similar amount of nutrients. Further, the nutrients milk provides are accompanied by relatively few calories.

Why Are Cows Detrimental to the Environment?

Cows are polluters par excellence. Much of the nitrogen in their manure turns into ammonia due to bacterial degradation. At least the manure can be collected and contained, not so with other bovine excretions. Cows are like Miracle-Gro for methane production; the same microbes that aid in cows’ digestion produce methane as a byproduct. In fact, any given cow produces at least 100 liters of methane every day. The overwhelming majority of cow-produced methane is emitted through belching, with most of the remainder of such enteric fermentation a function of flatulence. It has been reported that 26% of the total methane emissions in the United States are a result of bovine belching. While methane does not linger in the atmosphere as long as carbon dioxide, it is at least 25 times more potent as a greenhouse gas over a 100-year period.

Why is the Milk Business Particularly Challenging?

Dairy farms are extremely capital intensive. Cows do not produce milk until they are roughly two years old—but they must be fed and cared for every day. Farms are plagued with high turn-over among their employees. Pricing is stressed due to supermarkets sourcing their private label milk through price-based tenders. Diseases can ravage entire herds in a matter of days.

Cows must be milked every day and the output has a very limited shelf life. Fresh milk is a commodity that cannot be transported long distances. Demand for milk is inelastic; consumers will not buy more milk when prices fall. On the contrary, producers tend to exacerbate supply gluts by futilely trying to preserve revenues by boosting their output. Seasonality contributes to supply-demand imbalances. More milk is produced in the spring when cows graze on green, lush grass but consumers drink less milk during the spring and summer. Boom and bust cycles occur with regularity. To wit, American farmers actually poured almost 50 million gallons of unsold milk into holes in the ground in 2016 while the Irish Farmers Association warned of milk shortages on supermarket shelves.

What Must be Done to Stimulate Milk Production?

Comfortable cows are much more prolific producers than agitated ones. To get the best performance and most pregnancies out of a milk cow, she has to be kept cool, well-fed and well-rested. She needs to socialize with other cows but not feel crowded. In fact, European Union law requires straw bedding and for calves to be placed into groups when they reach eight weeks.

Now we have another bit of a riddle: The more milk a cow produces, the more sensitive she becomes. Contrary to conventional wisdom, cows do not conform to herd mentality—each cow is highly individualistic. So how can dairy farmers that manage hundreds of cows know which ones are fatigued, sick, hungry, hot or ovulating? As mentioned, once a cow takes a turn for the worse, the deterioration is usually irreversible. False signals are also problematic, farmers cannot afford to overfeed or lavish unnecessary medical attention on cows that do not need it. Given that feed costs range from one-third to one-half of dairy farm costs, carpet bombing the herd with more feed could be ruinous to the farm and injurious to the cows.

Afimilk Solves the Milk Production Riddle with Data

Afimilk monitors approximately four million individual cows in some fifty countries. The Company gathers reams of data about each cow, synthesizes the data and sends reports and alerts regarding the well-being of the monitored cows to dairy farmers.

The Company uses three primary data capture tools. First, scales are used to weigh the cows. Second, cows are outfitted with smart tracking devices, often in the form of neck collars. These sensors never stop functioning during their five year lives, require no battery replacement during that time and transmit data about the cow every five to 15 minutes. Embedded pedometers measure the cow’s eating time, resting time, distance walked and detect when the cow is getting fidgety. The tracking devices also detect other states that the cow experiences such as when she is ruminating (regurgitating her food).

The third set of Afimilk’s data capture tools are found on the milk line. One device quantifies milk components—such as fat, protein and lactose—in the milk that each cow produces. The other device on the milk line measures the milk’s weight and conductivity.

Empowering Dairy Farmers with Data

What is the connection between Afimilk collecting so much data about specific cows and the profitability of the farm or the well-being of the herd?

With the extensive data that Afimilk collects, alerts can be sent with bullseye accuracy regarding cows in need of more attention. If a cow is not resting enough or is walking too much, she might be in need of more rest. If a cow is too hot, she might need to spend more time in the cowshed. Data interpretation may indicate that selected cows need to eat more or that their feed should be adjusted with supplements or mixed with crops such as alfalfa.

If conductivity tests that measure the current flowing through produced milk reveal abnormal pH levels, the contributing cow could have mastitis which is a potentially fatal mammary gland infection. If the ratio of fat-to-protein in a cow’s milk deviates too far from one-to-one the cow may have a negative energy balance. This means the cow is less likely to become pregnant because she is producing too much milk, and burning too much protein, relative to the feed she is consuming. Without such continuous monitoring, cows would be subjected to expensive blood or urine tests, risk being treated without being tested, or remain neglected.

Data collection becomes very valuable when impregnating cows. Dairy farmers want the most prolific milk producers to reproduce so that the best genetic lines will endure. However, the best milk producers have the most difficulty getting pregnant. Since the window for insemination is very tight, pinpointing when a cow is ovulating is extremely important. Cows should become pregnant between 60 and 100 days from their last calving. Since pregnancy rates are below 50%, more than one attempt is usually necessary to impregnate cows. The longer it takes to impregnate a cow the more money will be lost as a result of delays in the start of the next lactation (which only occurs after calving). Measuring a cow’s activity and rumination patterns enable farmers to predict calving and thus determine when farmhands should be available to assist with the birthing process in case any complications arise.

Proof is in the Pudding

One example of Afimilk’s technology boosting milk output comes from Vietnam. Several years ago, Vietnam imported cows from New Zealand, each of which was producing an average of four tons of milk a year. Since the conditions (such as temperature) in Vietnam are much less conducive to milk production, one would think that those imported Kiwi cows would experience dwindling production. With Afimilk’s data management capabilities, the opposite happened; the cows soon began producing 10 tons of milk a year.

Points for Discussion with Management

The following are among the legitimate questions investors could pose to Afimilk’s management:

• There is an adage, You can’t manage what you can’t measure. What, if anything, is Afimilk doing to measure the methane and ammonia released by specific cows?

• Is Afimilk doing anything to reduce the lactose quotient found in milk? (Lactose is one of the allergens shoppers are looking to avoid.)

• Would Afimilk consider making available to consumers data that it collects relative to milk produced? For example, could we get to the point where I buy a gallon of milk, scan a code and learn about the cow that produced the milk? Could this be a revenue generator for Afimilk?

• Does the desired end product (e.g. milk versus cheese) make a difference in how cows should be managed or in the kinds of data that should be collected and analyzed?

• To what extent do Afimilk’s customers expect the Company to manage their cows beyond enhancing milk output and reproduction? In other words, how important is it for Afimilk’s customers that their cows will yield higher residual values?

• It has been reported that almond, coconut and other plant-based milks are taking market share from organic milk. Do you believe such shifts are mere flashes in a pan or will they prove to be persistent trends? If you believe consumer preferences are shifting what is Afimilk doing to address such developments?

• Does Afimilk’s growth strategy entail searching for greener pastures? Given that Afimilk already operates in approximately 50 countries, how many virgin markets await Afimilk? If Afimilk’s growth strategy calls for deeper penetration in its existing markets, does that mean that Afimilk will pursue smaller dairy farmers as customers? If so, would these newer and smaller customers be less profitable than the Company’s larger legacy customers? Can Afimilk’s technology be used to manage other farm animals?

• How has Afimilk’s employee-to-monitored cow ratio been trending in recent years? How much does this ratio vary among the Company’s customer base?

• Suppose that some of Afimilk’s customers found it very difficult to retain their employees. This scenario could arise as a result of a stronger economy or more diligent enforcement of immigration laws in countries such as the United States. Would Afimilk’s services become more important to these customers seeking to maintain high productivity or would Afimilk’s services become less important to these customers because they would lack the manpower to manage cows individually?

• Highly intelligent investors—such as Bill Gates, Jeremy Coller, Jack and Suzy Welch, Richard Branson, and Cargill—have invested in companies pursuing clean meat (manufacturing meat from cell cultivation rather than from raising animals). How would Afimilk’s business be affected if clean meat begins to take market share away from processing cows? Are you aware of efforts to produce milk from cell cultivation?

Transplanting Embryos in Cows in India

Milk flows like water in India. Since most Indians are vegetarians, they rely on milk as their primary protein source. Indians typically drink a glass of milk in the morning and prefer their tea milky. Large swaths of Indian children are provided free milk at school. Milk is found in meat dishes, curries, stews and in most desserts. Moreover, milk by-products such as chenna, paneer, cream, yoghurt and buttermilk are used to prepare a range of delicacies.

Milk is coveted in Indian superstition, culture and by the Hindu religion. Indians boil milk when they buy houses and when they move into them. Due to its perceived purifying qualities, milk is used to bathe Hindu idols on special occasions and is a common ingredient in sweets offered to Hindu gods. Milk is a staple in Indian rituals ranging from an infant’s first food to the last rituals after death.

India is both the world’s largest producer of milk and its largest consumer. To be specific, India is the world’s largest producer of milk from buffalo and its 100 million cows make that country the world’s second largest producer of cow milk. India is probably the least efficient milk producer of any size. The average daily milk yield for cattle in India stands at 3.9 kg per day, significantly less than the United States (32.8 kg) and Israel (38.6 kg).

There are a variety of reasons for India’s lagging milk productivity. India’s small farmers can’t squeeze any more productivity out of their three to five cows; their hands are already full. Larger farm operators see no urgency to invest hundreds of thousands of dollars in robotic milking systems when cheap labor is so plentiful. In general, Indian farmers have not adopted cutting-edge nutrition management or world-class veterinary standards of care. Appropriate feed is not available in all seasons or in all parts of India. As a result, Indian cows are less healthy and more vulnerable to disease than cows in more milk productive countries. Further, Indian cows have inferior genetic strains compared with cows whose forbearers have undergone genetic breeding.

Kfar Hanagid, Israel-based Maxximilk is dedicated to boosting the quantity and quality of milk produced by Indian cows through embryo transfer. Embryo transfer differs from artificial insemination. Artificial insemination entails only selecting donor sperm and then injecting it into uteri. Embryo transfer calls for creating embryos from both sperm collected from elite donor bulls and eggs collected from crème de la crème cows. Transferring embryos is many orders of magnitude less expensive than transporting live animals.² Risk of diseases spreading is also reduced as there is less interaction among the animals.

The Embryo Transfer Process

The process of planting enhanced embryos in cows begins with Maxximilk selecting the finest cows in terms of characteristics such as genetics, milk production, body weight, protein, fat and the ability to withstand India’s hot weather conditions. Ultrasound technology is used to aspirate the eggs from choice cows. Interestingly, about 20% more eggs can be extracted from Indian cows compared to non-Indian cows—an excellent productivity boost considering the delicacy of the egg removal process. Why do Indian cows produce more eggs? Cows have limited energy. The less energy they devote to producing milk, the more energy gets channeled into fertility. Since Indian farmers do not squeeze the last drop of milk out of their cows, India’s cows produce more eggs.

These selected eggs mature for 24 hours. In the meantime, Maxximilk selects American and Canadian donor bulls. These bulls are desirable because their semen is sex sorted, meaning that cattle breeders can choose the semen that will produce only the gender of offspring they seek. This is important and humane; since bulls do not produce milk they offer less utility to India’s struggling farmers than cows. Since 28 of India’s 29 states have cow-slaughter protection legislation in place, without sex-selected semen, law-abiding Indians would have to maintain unproductive bulls at tremendous expense.

In any event, the donated egg and semen are fertilized together in a laboratory. These burgeoning embryos are then grown in incubators for seven or eight days. At that point the embryos can be injected into cows. The embryos can also be cryopreserved in liquid nitrogen at -196° C indefinitely or until surrogate cows are selected to receive the embryos. According to my discussions with Maxximilk’s management, the Company’s cryopreservation procedures can enhance pregnancy rates by up to 20%.

Another benefit of embryo transfer is that a herd’s calving rate can soar exponentially. Typically, dairy cows give birth to between two and five calves over the course of their five year lifespan. By aspirating eggs from genetically favorable cows and inserting them into lower producing surrogate cows, Maxximilk can facilitate the birth of as many as 100 calves per year from genetically desirable cows. Further, since embryo transfer uses the best sperm and the best eggs, a significantly enhanced breed of cattle can arise within one livestock generation (or about three years). On the other hand, since artificial insemination is egg ambivalent, it takes approximately four generations (or 12 years) to achieve similar genetic results in dairy herds.

Points for Discussion with Management

The following are among the legitimate questions prospective investors might wish to pose to Maxximilk’s management:

• Please discuss the improvements in milk yields that can be attributable to Maxximilk facilitating embryo transference.

• In view of the deference that Hindus have for their cows, to what extent must those who work with Indian cows kowtow to them?³ Are there any special handling procedures that must be followed? If the cow indicates that she is stressed, must she be left alone?

• I do not expect you to divulge Maxximilk’s secret sauce but where in the bovine in vitro fertilization-like process does Maxximilk’s proprietary know-how lie? With selecting the donor bulls? Selecting the donor cows? Extracting the eggs from cows? Cryofreezing the sperm or the embryos? Adding a secret sauce to the embryos? Monitoring the cows post insemination?

• How is Maxximilk scaling its business? It seems that the value the Company brings to the table is in the form of proprietary methods, rather than formulations or mechanical technologies.