China’s stock market collapse: Conditions are ripe for increased Chinese investments in Israeli startups

The Chinese Stock market’s recent turmoil has led many to question the future for Chinese companies and investors. China has lots of available capital in need of a new home so where are the strong new investment opportunities facing the Chinese investor?

One natural place is Israeli tech. The fierce competition among the Chinese mobile and e-commerce giants is just the beginning. Alibaba, Baidu, Tencent have already invested in the Startup Nation this past year. On the rise are sophisticated family offices, telcos, media conglomerates and China based VC’s and PE’s.  Precisely because China lacks the deep technology architecture that makes up the core of Israeli startups, we anticipate a steady stream of smart capital to the Israeli startups with the most relevant products for China.  IoT, edTech, enterprise software, web analytics, smart targeting and more.

There’s a reason why Israeli entrepreneurs is a magnet for leading Chinese investors and tech executives to attend Mobile World Shanghai; it’s the same reason that Chinese investors are flocking to Israel and why China and Israel make such strong investment partners.

Top Technology: Israel has it and China needs it

Asian investors are smart and savvy; they come to us for curated Israeli technology because they are specifically looking for the most disruptive and technologically advanced algorithms.  Israeli entrepreneurs are on par or even ahead technologically from their Silicon Valley peers. They’re a proven and valued source for innovation with a history of  IPOs and M&As with 2015 already being a stellar year and on track to beat 2014’s record* (IVC/Meitar July 7, 2015 Report)

Competing for Israeli Dealflow or “Show me more than money”

China and HK based investors with strong networks and portfolios in China want to be smart partners.  However, Israeli entrepreneurs have a choice when selecting new investors –especially those raising Series A, B and beyond.  More than capital, these entrepreneurs want the durability, the strong relationships, network and customer base that will truly yield success for their products in China. Investors need to demonstrate they can deliver and be a true partner in China.  The more leveled playing field has resulted in for Chinese and S.E Asian funds ‘pitching’ their value beyond the big check.

Some notable Israeli companies exhibiting this week at Mobile World at Shanghai reflect the calibre of Israeli innovation ready to expand to China. Here’s two I think are worth looking at:

SpeakingPal, a robust educational platform endorsed by ETS, dedicated towards creating English fluency through mobile interaction, has traction and success in SE Asian nations such as Vietnam, Thailand and Indonesia. The company is strategically ready to target China, but understands that only with the right partner will the venture be worthwhile.  With Linkedin’s $1.5 billion acquisition of Lynda just a couple of months ago and the rise of  China’s booming edtech market, SpeakingPal is one to watch.

Tekoia another example; the startup has a technology aimed at creating a user friendly mobile application to control your smart home. China is leading the world with IoT and smart home devices—Tekoia has attracted the major players in China and is set to lead the market.  As cited in June’s Forbes profile on China, the big “ABT” players, Alibaba, Baidu and Tencent, are all competing on investments and acquisitions in services that add most value to consumers and businesses and with China leading the world in IoT – Tekoia is primed to leapfrog into the green ‘lifestyle management services’.

Note from Huiyi, TIA’s community manager:
Esther Loewy is the founder and CEO of Upround Ventures a boutique venture advisory firm that cultivates and hones the Israel-China Investment Continuum. The firm curates the Israeli startups most likely to succeed in China and SE Asia and qualifies the right investors for the right companies. 🙂