Jerusalem-based venture capital firm OurCrowd said Thursday that ORIX Corporation is investing a strategic $60 million in its crowdfunding platform, marking the first time the Japanese financial services group has become active in Israel’s startup ecosystem.
Through the collaboration, OurCrowd will provide ORIX “access to a wide variety of innovative technologies and companies,” OurCrowd said in a statement. ORIX and OurCrowd will also work to increase cooperation between the two countries and increase opportunities for Israeli startups in Asia.
“ORIX is a financial powerhouse and will help us develop new sources of investment from their Japanese and global networks,” Jon Medved, CEO of OurCrowd, said by email. “They will work with us to build our business by helping us gain many new important investors.”
ORIX will have the opportunity to invest selectively in OurCrowd’s 23 funds or directly into OurCrowd’s portfolio of 220 companies, he said.
Over the past several years, economic relations between Israel and Japan have experienced unprecedented growth after years of stuttering mutual trade relations that were mostly kept under wraps.
The very conservative Japanese had been reluctant to embrace Israel because of traditional fears of upsetting Arab oil suppliers, or because of cultural differences. But following the visit of Prime Minister Benjamin Netanyahu to Japan in May 2014 and then-Japanese prime minister Shinzo Abe’s visit to Israel in January 2015, the number of investment deals and their values surged.
In the first half of 2020 there were 18 investment deals that involved Japanese investors for a total of $853 million, compared to 25 deals for a total of $660 million in the first half of 2019, a report by Meitar Law Offices and IVC Research Center published in September showed, indicating that the interest of Japanese investors in Israeli startups is going strong in spite of the pandemic.
The presence of Japanese companies in Israel surged from 26 in 2014 to more than 90 in 2019, the Meitar-IVC-report said, and in 2019 Japan became the nation with the third-highest value of investments in Israeli tech, after the US and Israel, jumping ahead of the UK, China, Germany, Singapore, South Korea, Canada and France.
The collaboration will bring “the best of Israeli tech to Japan’s large industrial and financial sectors,” said Kiyoshi Habiro, the CEO of ORIX UK, in the statement.
In absolute numbers, however, Japanese investment is still small, compared to that of US and Israeli investors. In 2019, US investors invested $4.163 billion in the Israeli tech sector and Israeli investors put in $2.961 billion, compared to the $379 million invested by Japanese players.
“While Japan-Israel trade has grown considerably, there is huge potential to grow it much bigger,” Medved said. “There is great interest in Japanese corporations in the Startup Nation.”
ORIX is active in a wide range of businesses including corporate finance, industrial/ICT equipment, environment and energy, automotive, real estate and private equity. The firm has offices in 37 countries across the world.