China giant Alibaba teams up with Israeli VC for investments

With help from Jerusalem Venture Partners, one of the world’s biggest companies seeks to widen its stake in local tech

JVP partners Kobi Rozengarten, Gadi Tirosh and Raffi Kesten (Courtesy)
JVP partners Kobi Rozengarten, Gadi Tirosh and Raffi Kesten (Courtesy)

Alibaba, the Chinese web merchant that pulled off one of the biggest IPOs in Wall Street history last year, is partnering with Israeli venture capital firm JVP (Jerusalem Venture Partners) to invest in a range of companies, JVP partner Koby Rosengarten announced Monday.

The announcement was made ahead of an annual meeting of the firm’s investors and partners later Monday. The amount of the investment was not announced, but sources said that it was “substantial.”

According to an industry source, JVP, with some $1 billion under management, attracted Alibaba’s attention with several of its recent “wins” – exits for companies like security firm CyberArk, which listed on the Nasdaq last year, and CyActive, which was recently bought by Paypal for $60 million. Altogether, some 20 JVP-invested firms have achieved exits since the firm was established in 1993. In 2012, VC industry monitor PEHub ranked JVP as one of the top ten VCs in the world, and one of only two outside the US in that category.

While Alibaba has already invested in Israeli start-ups – in January, the company announced a $5 million investment in Visualead, a start-up that develops QR (Quick Response) code technology – the investment with JVP will give Alibaba entrée to the heart of the top technologies being developed in Israel today. Among JVP’s projects, for example, is the Beersheba Cyber-Security Incubator, located in the Beersheba Advanced Technologies Park, which is home to the Israeli R&D facilities of several multinationals, including Deutsche Telekom, EMC, and Singtel.

The incubator provides a home to early-stage start-ups working in the cyber-security field, which is quickly becoming one of Israel’s most important tech industries. Speaking at a recent tech event, National Cyber Bureau chairman Dr. Eviatar Matania said that the worldwide market for cyber-security products, services, and technologies was currently worth about $80 billion annually and rising, and Israel had about 10% of that.

“That makes us a power in cyber-security,” he said, echoing comments by Prime Minister Benjamin Netanyahu, who said at the Cybertech 2014 industry event that “Israel is unquestionably a leading power, disproportionate to our size, with great talents and great resources.”

Alibaba, the world’s biggest online merchant, is naturally interested in cyber-security, but also in financial technology, mobile connectivity and apps, video, and other areas JVP has had an active role in helping to develop, the industry source said.

Accompanying the Alibaba executives who closed the deal with JVP is a group of Chinese investors and corporate executives, including Jason Lu, VP and Chief Risk Officer of Alipay, a subsidiary of Alibaba and one of China’s largest online payment firms. They will meet with Rosengarten, along with JVP partners Gadi Tirosh and Raffi Kesten, at the firm’s annual investor event Monday night.

“The interest of Alibaba in Israel is very significant, we believe,” said the source. “Alibaba is not just another tech firm, but one of the biggest companies in the world of any type, and for whom doors open wide anywhere in the world. This is the company that has chosen to make a major strategic investment in Israel.”

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