Chinese investors rush to embrace Israel via new fund

During China’s roughest economic week in years, the CreditEase Israel Innovation Fund raised $30m for Israeli investments

A group of Chinese investors on a recent trip to Tel Aviv ( Courtesy)
A group of Chinese investors on a recent trip to Tel Aviv ( Courtesy)

One of the biggest microcredit and wealth management firms in the world, CreditEase China, is actively seeking out investments in Israel. CreditEase has partnered with veteran investors in Israel Tayman Kan and Benjamin Weiss to establish the CreditEase Israel Innovation Fund (CEIIF), its first Israel-focused venture-capital/private equity fund.

The fund has raised $30 million so far. And the story of how that money was raised is a testimony to the enthusiasm for and confidence in Israel in China’s investment community, said Benjamin Weiss, who along with fellow investor Tayman Kan is managing partner of the fund.

“We raised the money for the fund in mid-August, during what was the worst week for the Chinese economy in many years,” said Weiss.

That was the week – the week of August 10th – that Chinese stock markets tanked, and the government essentially devalued the renminbi by 3.5%, sending jolts through the world economy.

“Still, with all the fears in the investor community that week, we found investors very enthusiastic about the idea of working with the Fund. In fact, we were questioning whether we should include ‘Israel’ in the Fund’s name, in order to appeal to as broad a base of investors as possible – but the salespeople told us we needed to include it,” said Weiss. “That’s how strong a brand Israel is in China.”

Via CreditEase, more investors than ever will have an opportunity to be a part of the Start-Up Nation. Known primarily for P2P microloans – where small stakeholders are able to borrow money at bank rates in order to accomplish specific goals or carry out specific projects – CreditEase has built up a very strong following and brand loyalty in China, said Weiss, and in recent years has begun marketing funds for more prosperous clients as it enters the wealth-management business more deeply.

“Until now they have marketed funds that belong to other firms,” added Weiss. “This is the first fund that they are actually partnering on themselves, and CreditEase hopes it will be a paradigm for other such ventures.”

The new fund focuses primarily on private technology companies located in Israel, and it is open to opportunities in the US and UK as well, said Weiss. Areas of interest include technology, media, telecommunications, smart materials, and health care – with an emphasis on cutting-edge areas such as genomics, augmented and virtual-reality tech, and “technology to clear up the clogs in networks due to the overload of data from video and other data-heavy usages,” said Weiss.

Both Weiss and his partner are old hands at investing in Israeli firms. In 2011 their iNetworks 360 fund was the first seed investor in Pebbles Interfaces, the virtual-reality startup recently sold to Facebook. Since then, they have invested in 10 other Israeli companies, including Corephotonics, Saguna Networks and Silentium.

While many analysts are concerned over the possibility of China pulling back from international investments because of troubles at home, Weiss believes that things will work out OK.

“It’s really impossible to use the term ‘China’ to describe a country of 1.5 billion people – there are really many Chinas,” he said. “And a significant number of those Chinas need the technology Israeli start-ups and established firms bring to the table. Even if there is some pullback, there is more than enough opportunity – and money – in China to ensure that Israeli tech firms can work with companies and investors from there for many years to come.”

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