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Chinese VC to invest $500m in Israel in 2015

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Tuesday, June 9th, 2015

IVC believes that half of the funds that raise money by the end of the year will have at least one Chinese investor.

As reported in Globes: Chinese investors continue to show growing interest in Israeli high tech. According to IVC Research Center, Chinese investors will invest an estimated half a billion dollars in Israeli venture capital in 2015. IVC held a conference yesterday where it revealed the data and publicized another estimate, according to which Israeli funds will raise between $1.2 billion and $1.5 billion by the end of this year. In addition, the company believes that half of the funds that raise money by the end of the year will have at least one Chinese investor.

IVC examined the data on venture capital in Israel and the US, which grew 30% – 50% between 2013 and 2014. In China, by contrast, venture capital increased by 300% in a single year. Since 2012, more than 30 entities from China and Hong Kong invested in Israel that had not previously done so. The number of Chinese investors is growing, according to the data, at the impressive annual rate of 50%. China’s venture capital industry totaled $15.5 billion in 2014, compared with $48 billion in the US, and $3.4 billion in Israel.

Israel-China investment fund Synergy China Fund managing partner David Fuchs, who participated in the conference, said: “The money flowing in is just the tip of the iceberg; there are many more good investors and strategic partners who are looking for interesting investments within China, and don’t reach Israel.”

Meanwhile, the Chinese news site CCTV, which is affiliated with the Chinese government, published an article yesterday about Chinese companies seeking technological developments in Israel. The article said, among other things, that “The governments of China and Israel, along with leading universities from the two countries, collaborate on the establishment of some of the most advanced R&D centers in the world and in Israel – a country that is increasingly becoming recognized as the Silicon Valley of the Middle East. Tech research labs in Israel have received hundreds of millions of dollars in investments to develop new inventions that will conquer the hearts of consumers, investors, and manufacturers. Chinese tech giants – Alibaba, Baidu, Foson, Lenovo, and Xiaomi – signed deals to open R&D centers in Israel.”

The article went on to say, “Chinese companies understand that the traditional means of doing business, which includes manufacturing low-quality, cheap gadgets, is no longer a winning formula. Israeli companies are known to be leaders in innovation in Internet of Things (IoT), online information security, educational technology, fintech, and mobile and digital healthcare devices. At the same time, Chinese companies know better how to bring these products to the mass market.”

JVP’s contest

Another entity that is tightening ties with Chinese investors is Jerusalem venture capital firm JVP. Three months ago Alibaba invested tens of millions of dollars in the fund and became a strategic investor.

Today, JVP announced an impressive response to its Global Innovation Awards 2015 start-up competition, which is being held in conjunction with Chinese management consulting firm Shengjing. More than 180 local start-up companies have asked to participate in the contest, in which 3 companies will represent Israel in the finals, which will be held in Beijing in September. The companies will compete for prizes totaling $1.5 million, and will also gain exposure to Chinese giants such as e-commerce giant Alibaba, search giant Baidu, and Chinese phone manufacturer Xiaomi.

JVP Fund managing partner Kobi Rozengarten said, “The Global Innovation Awards contest is a significant springboard for Israeli start-ups – the international exposure to investors and potential partners. Marketing exposure and the potential financing are critical factors in the success of a venture. We were happy to see that also companies that have already received financing recognize the great value that this competition offers. The competition attracted an unprecedented number of ventures, from various fields, representing existing Israeli growth engines, such as web and mobile, as well as future growth engines, such as wearables and IoT. The exposure to global markets, and particularly to the Chinese market, that Israeli innovation receives in these fields is an opportunity for the entire industry, not just for the individual start-up.”