Israeli entrepreneurs are growing tired of Chinese delegations and visitors which prove to be with no real business potential. The Israeli business people report they have a difficult time telling the serious investors from the rest.
“Dozens, even hundreds of Chinese investors – entrepreneurs and government officials alike – visit in Israel every week.” Says Edwards You LYU, founder and CEO of VADI, a Tel-Aviv based company which is fully owned by Chinese.
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“They attend various high tech events to evaluate startup companies for investment. For more of them, this is the beginning and the end of the connection with the Israeli entrepreneurs.”
Lyu adds that the multiple futile relationship lead to increased frustration among many startup companies which grow tired of hinging their hopes on potential Chinese investors who visit their headquarters, take photos, ask questions but leave with no definite agreement. “This is the beginning of a trust crisis that might adversely impact the trade between the countries.”
Mr. Lyu says There’s a different breed of potential Chinese investors who so far have not made many visits to Israel “I am referring to small to medium Chinese companies which are searching for strategic investments that would infuse innovation in their particular industry. This is the type of investors that VADI Ventures is now beginning to attract. We founded VADI in order to draw the Israeli startup industry closer to Chinese investors that suit its needs.”
LYU adds that Chinese Giants such as Baidu, Tencent, Alibaba and others may explore Israeli out of serious intentions, but are not necessarily suitable or able of investing in all startups. This gives rise to the need in another class of serious investors.
“Study tours of ‘The Start Up Nation’ have become a popular trend in China. Many of these tours are organized by tourism operators rather than by funds or other entities associated with the world of investments. As a result, no one filters the investors who go on these tours in attempt to assess their investment potential, ” he concludes.
In order to bridge the gap, VADI has established a mechanism which is based on its Chinese partners:
It screens the visiting business people from China in order to identify the ones who come to Israel with serious intentions and create a new source for investments for Israeli startup companies on top of the giant Chinese corporations.
One of the partners at VADI is China Zhisland headquartered in Beijing, a large business club which incorporates 5, 000 Chinese businesses with turnover of over at least RMB 100 million each.
Some two thirds of these businesses come from traditional manufacturing industries. Another partner is MICI (Made In China International), China’s largest operator of study tours outside China for Chinese entrepreneurs and business people.
Tours organized by MICI are coordinated with the E-MBA programs of the best Chinese universities. “While there are other organizers of study tours to Israel, we are the only one with in-depth information about the investors, through our member club. As a result, the chances of meeting a serious investor are much higher.”
LYU sheds light on another interesting angle of the investment motivation of Chinese entrepreneurs: “These are managers of medium sized companies, with little to no experience in investing outside China. The local startup industry is beginning to thrive in China too and there are quite a few local entrepreneurs with interesting technologies. However, the high valuations of Chinese technology companies (higher even than their US counterparts!!) pushes the Chinese investors to look for opportunities in the Israeli high tech, on top of the strong appreciation the Chinese feel towards the Israeli innovation.”
VADI will hold a first event under the name China-Israel Hi-tech Investments Forum (June 6-7 at David Intercontinental hotel, Tel Aviv) in the participant of Israeli entrepreneurs and more than 100 Chinese investors and entrepreneurs, with a focus on mobile internet, virtual reality and Artificial Intelligence, medical device, digital health and cleantech.
Among the speakers: Yossi Vardi CEO of International Technologies, Robert Aumann 2005 Economic Sciences Nobel Laureat, MK Erel Margalit head of Israel-China Parliamentary Friendship Group, Ziva Eger chief executive, foreign investments and industrial cooperation in Israel Ministry of Economy, Prof. Joseph Klafter President of Tel Aviv University, Adv. Daniel Green partner at Yigal Arnon & Co., Chen Li founder and president at Zhisland United Capital, Zhao Sheng CEO of MICI, co-founder of Silicon Valley Makers Technologies and of Israel Vadi Ventures, Dr. Li Li Kai, Chairman of Ennohub Technology and founding partner of Ennohub Venture, Koby Simana, CEO of IVC Research Center, Shlomo Gradman Chairman of the Israeli High tech CEO Forum, Yuval Avni CEO of Beta O2, Roy Weisner CEO of Hutchison Kinrot, Benjamin Soffer CEO of T3 Technion Technology, Oran Kochavi VP at TerraLab Ventures, and more leading businessman and entrepreneurs. For the forum website, press here.
