China stock drop casts pall over million-dollar start-up contest
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China stock drop casts pall over million-dollar start-up contest

2 Israeli start-ups snag top prizes in a prestigious competition, as Chinese investors worry about their country’s financial future

Global Innovation Awards partners at an event in Tel Aviv on February 2. 2014. (L to R): Steven Katz, EMC Ventures; Xueling Cao, Director, Shengjing Group and Shengjing Fund of Funds; Sherrie Wang, Senior Partner at Shengjing Group and Shengjing Fund of Funds; Tamir Huberman, Yissum (Hebrew University); Kobi Rozengarten, Managing Partner, JVP; Yoav Tzruya, Partner, JVP; Maya Netser, HFN; and Hanan Haviv, Partner HFN (Photo credit: Benny Doutsh)
Global Innovation Awards partners at an event in Tel Aviv on February 2. 2014. (L to R): Steven Katz, EMC Ventures; Xueling Cao, Director, Shengjing Group and Shengjing Fund of Funds; Sherrie Wang, Senior Partner at Shengjing Group and Shengjing Fund of Funds; Tamir Huberman, Yissum (Hebrew University); Kobi Rozengarten, Managing Partner, JVP; Yoav Tzruya, Partner, JVP; Maya Netser, HFN; and Hanan Haviv, Partner HFN (Photo credit: Benny Doutsh)

An Israeli start-up has won first place in a million dollar contest that has just concluded in Beijing.

DiaCardio, based in the southern Israeli town of Omer, came in first in the final round of the Shengjing Global Innovation Awards. DiaCardio will share the million-dollar prize with the other top four winners, receiving $200,000 to advance its diagnostic assessment for cardiograms.

Using specially-developed algorithms, the company’s software analyzes cardiograms (ultrasound exams of the heart) to decode the main parameters of the heart’s functioning (heartbeat, murmur issues, blood flow problems, etc.), producing on the spot results that are compatible with hospital databases and eco-cardiograph machines. The system has received FDA approval and CE marking.

DiaCardio wasn’t the only Israeli winner in the event. Wayerz, which developed a platform for inter-bank charges (billing) while providing management, commands and control of inter-bank processes in real time, came in fifth place, qualifying it for a $200k share of the million-dollar top prize.

The event included 21 start-ups from around the world – ten from China, five from the US, three from Israel, and three from Europe and Latin America.

But beyond the cash, DiaCardio and Wayerz received something much more important for a young start-up – business connections, and load of exposure in the Chinese media, which covered the story in depth in newspapers and broadcast on CCTV, China’s national TV network. Over 1,000 of China’s top investors and fund managers attended the finals Tuesday, with the decisions on the winners made by a team of 13 judges from around the world.

That exposure is more crucial than ever, said Sean Jiang, managing p[artner and CEO of Yafo Capital, a Shanghai-based investment bank that specializes in Israeli investments. The awards were given out during the third day of a rout on the Shanghai Stock Exchange, which has sunk by tens of percent in the past several days. Wary investors are thinking twice about their financial commitments, and sustained losses on Chinese financial markets will negatively affect the investment atmosphere.

But not for too long.

“China has been talking about the importance of tech investments for the past two decades, but this time they mean it,” Jiang told the Times of Israel. “The three growth drivers that China has been relying on – exports, infrastructure investment, and urbanization – have more or less played out. If the country wants to keep expanding its economy, it has no choice but to invest in tech as aggressively as it can.”

That tech has come from around the world – but Chinese investors are quickly learning that there is something special about Israel. “I have been in investment banking in the US and China for two decades, and just two years ago, very few of my Chinese colleagues had considered investing in Israel, as we have been doing for the past five years. In the past year, though, the interest in Israel has skyrocketed, as word gets out that Israel has important technology in areas that China really needs – agriculture technology, medical technology, communications, defense, and many others. Our organization is constantly being invited to speak to investment and government groups about Israel.”

Even during troubled financial times, investors are still looking for good opportunities – and the more exposure they get to solid Israeli tech, the better the prospects that they will be persuaded to write checks to start-ups with technology that can succeed in China, and elsewhere, added Jiang.

The Shengjing Global Innovation Awards, initiated by Chinese consulting firm Shengjing360 and led in Israel by Jerusalem Venture Partners, took place during this week’s Zhongguancun International Entrepreneur Festival – a government-sponsored event that brought thousands of entrepreneurs and tech veterans to the Beijing suburb known as China’s Silicon Valley. Although there is a lot of uncertainty in China this week, the country – both private investors and the government – remain fully committed to developing tech relationships with Israel, said JVP partner Yoav Tzruya, who oversaw the Israeli side of the contest and accompanied the Israeli start-ups to China, serving as a judge in the finals.

“‎Innovation is still one of the Israeli economy’s main competitive advantages, and we are pleased to see Israeli ventures receive such global recognition,” said Tzruya. “The competition presented a unique opportunity for Israeli startup companies to penetrate the Chinese market as well as other international markets. In light of the latest macroeconomic developments, it is clear that technological innovation is key to continued solid growth and a country’s ability to differentiate itself. Great powers, such as China, allocate extensive resources to create and leverage innovation. ‎ ‎Israel should harness the startup culture and innovative ventures to gain a major foothold in this market.”

With that, investors and Israeli entrepreneurs should hope – or pray, if they are of a religious bent – that things get sorted out on world markets, and especially in China. “There’s no question that a real sustained market crash will scare off investors in Israeli start-ups, or anywhere else,” said Jiang.

“We ourselves had been preparing a buyout of a large Israeli company in the healthcare space for a huge Chinese pharma firm that had a market cap of three and a half billion dollars – three months ago,” said Jiang. “Now, after the recent stock market routs, their market cap is a billion and a half dollars – making the $300 million we had worked out as the price for the Israeli company too expensive for them right now. Making these kinds of deals is definitely a challenge right now – but if China is to grow again, it is going to have to figure out ways to make them work.”

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