Israeli Tech Startups Attract Chinese Investors
China’s Search for Tech Investments Leads them to Israel
Liu Yandong, vice premier of the People’s Republic of China, in a white jacket, and Avi Hasson, Israel’s chief scientist of the Ministry of Economy, in a red tie, attend a three-day tech conference held in May in Tel Aviv. ZVIKA GOLDSTEIN
Dec. 16, 2014 5:28 a.m. ET
TEL AVIV—As China scours the world for tech investments, it is increasingly flocking to Israel for the next big thing.
Baidu Inc. ‘s investment in Uber Technologies Inc. last week is just the latest big Chinese investment in a foreign firm. But Chinese executives and investors say the tech startup hub of Tel Aviv is fast becoming a frequent stop in China’s global hunt for companies, startups and investments. They are joining American, European and Russian investors who have been shuttling in and out of Israel for years—many of whom have taken advantage of the country’s high-tech workforce to set up research and development beachheads.
China’s hunt for innovation spans the globe, with investments in Silicon Valley, Europe, India, Korea and Malaysia. Israel is a relatively late addition, but a welcome one amid Tel Aviv’s tech startup community.
Politics may also factor in. “Israel is a bystander in the game between China and the U.S. The competition between the two gives Israeli startups an edge. A Chinese phone manufacturer, who wants to compete with Apple, would feel more comfortable with an Israeli entrepreneur, without fearing patriotism or favoritism by an American company. All things being equal an Israeli company is more likely to get a Chinese investor’s money,” said Alon Sahar, a partner at Meitar Liquornik Geva Leshem Tal law firm.
“China is our fastest-growing market and we figured we needed Chinese partners and investors,” said Tomer Bar-Zeev, chief executive of Tel-Aviv-based IronSource Ltd., an advertising technology company.
Over the next two years, China is expected to surpass the U.S. as Israel’s biggest collaborator in the number of joint government-backed development projects, said Avi Luvton, executive director for the Asia Pacific region at the Israeli Industry Center for R&D.
“American investors might not be seeing it yet, but they will feel the competition soon,” said Koby Simana, IVC Research CEO.
“The first two destinations we’ve targeted for venture investments were the U.S. and Israel,” said Daniel Tu, group chief innovation officer of the Ping An Insurance (Group) Co., a financial services group. In September, Ping An Ventures, the company’s venture capital outfit, took part in an $85 million pre-IPO funding round in Mr. Bar-Zeev’s IronSource.
Mr. Tu says, in some cases, Israel entrepreneurs are easier to work with. “Silicon Valley startups are keen on disruptive technology. I find Israeli entrepreneurs more practical as they build out their companies. They now view China as a viable option for both growth and exit strategies,” he said.
Ping An Ventures has made eight investments in Israeli startups so far. Last week, it said it would co-lead an investment of $27 million in Israeli online …read more