Chinese giants Baidu, Ping-An invest in Israeli VC

For its newest fund, Carmel Ventures has partnered with several large firms from China

President Reuven Rivlin (R.) and China's  former Ambassador to Israel Gao Yanping at an event in Tel Aviv commemorating National Day, the 65th anniversary of the founding of modern China (Photo credit: Courtesy)
President Reuven Rivlin (R.) and China's former Ambassador to Israel Gao Yanping at an event in Tel Aviv commemorating National Day, the 65th anniversary of the founding of modern China (Photo credit: Courtesy)

Israel’s Carmel Ventures investment fund has closed its fourth investment fund, valued at $194 million, with a little help from friends in China. Among those providing financing for Carmel Fund IV, as it is officially known, are Chinese companies including web services provider Baidu, insurer Ping-An, and software company Qihoo360.

Like other Carmel funds, Fund IV will concentrate on early stage tech firms in high growth sectors that include enterprise software, data center infrastructure, big data, cyber security, financial technology, digital media and consumer applications. Carmel began investing from the new fund in January 2014 and has made investments in PlayBuzz, LuckyFish and three other promising early stage technology companies, the firm said. Carmel Ventures currently manages over $800 million of investor capital and is invested in 35 active companies. Carmel is a member of the Viola Group, which has over $2 billion under management.

Carmel is just the latest Israeli venture capital firm to team up with China, as that country becomes more involved in the Israeli tech scene. Among the funds created from an Israel-China partnership is the Catalyst CEL Fund, a creation of Israel’s Catalyst Equity Management and China Everbright Limited investment fund. This fund is focusing on investments in agriculture, industrial/manufacturing, health care, water, energy, technology, media and telecommunication, among others, all chosen for their potential success in the Chinese market. The fund secured more than $100 million at its first closing in March 2014, and is targeting $200-$300 million for its final closing.

According to Edouard Cukierman, chairman of Cukierman & Co. Investment House and a managing partner of the Catalyst Investment Funds, “China over the past two years has become the number one investor in Israel. For them, Israel is a great source of technology to help them develop their economy, while for us, it’s a fantastic opportunity to gain entry into the biggest market in the world. As much as we are helping them, they are helping us.”

Nathan Low, an Israeli-American investment banker whose ZionTech Angels group has paired up dozens of Israeli companies with foreign investors, also sees China as a place where Israelis can do business – lots of it. “Israeli startup companies can solve problems with the technologies and products they already have in hand, eliminate or vastly reduce China’s food and water shortages, improve freight logistics, optimize municipal bus schedules, reduce pollution, as well as improve health care,” said Low. “China and Israel are destined for partnership. China has the money and the markets. Israel has the products to solve problems and address opportunities.”

Similar sentiments were expressed by Group Chief Innovation Officer Daniel Tu at Ping-An Group of China. “We are delighted to be making our first investment in an Israeli venture fund with Carmel Ventures,” he said. “Carmel offers us reliable access to Israeli innovation, and we look forward to partnering with them.”

“Building global, significant Israeli technology companies is what we’re passionate about at Carmel,” said Shlomo Dovrat, co-founder and general partner at Carmel Ventures. “We are committed to backing visionary Israeli entrepreneurs who aspire to transform industries and markets on a global scale, and build world class companies. We hope to back those teams early on and be helpful to them as they scale up. We are fortunate to work with many exceptional entrepreneurial teams: Companies such as ironSource, Outbrain and Payoneer are transforming entire industries, generating significant revenues and have become global leaders.”

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