SIMBA - Shirat Enterprises introduces a new business in China and Israel

Source: IVC Research Center, Koby Simana

Chinese interest in Israeli innovation and technologies has been growing rapidly in the past few years, as has Israeli tech startups’ interest in the Chinese market. However, successful integration, investments and cooperation between Chinese and Israeli companies is still a challenging process, considering cultural differences, language barriers, as well as various legal and business issues. Earlier this month, we've organized our 3rd annual seminar addressing this challenge trying to address some of these issues and help serve as a facilitator between Chinese investors and the Israeli industry.

Data extracted from the Israel-China Chamber of Commerce reveals the appetite is great from both sides; 500 Chinese business delegations visited Israel during 2015 and countless meetings with Israeli high-tech companies, incubators, VCs and government representatives occurred. However, our findings based on deal information from the IVC-Online Database revealed that only 120 companies raised capital form at least one Chinese investor in the past decade – only two percent of all rounds that took place during this time. This is while more than 70 percent of financing rounds by Israeli startups involve at least one foreign investor, which begs the questions why – with so much interest and potential, are there not more Chinese investments in Israeli startups.

The good news is our findings suggest the momentum is picking up: 64 new Chinese investors started to invest in Israeli companies since 2012, 18 of them in 2015. But there’s still a lot of work to be done to bridge the expectation gap between Israelis startups and potential Chinese investors and make sure all interests are aligned. This reasoning prompted us to initiate the annual seminar to begin with, and keeps us going for the third year running. We realized Israeli entrepreneurs need to understand the Chinese investor they are facing, understand the differences while recognizing the similarities. An investor could be a financial investor looking to maximize the return on investment, industrial players looking for new technology to be integrated into an existing operation, a wealthy second generation person looking for new business opportunities and new economy investments – no matter the impetus or driving interest, Chinese investors seem to lead by a long-seeing strategy that Israeli entrepreneurs are not accustomed to yet.

With so much potential and interest, we believe there is room for a new kind of service that will help potential Chinese investors and organizations, identify potential partners in Israel, bridge cultural and communication gaps and help both sides align interests and expectations. This is why we have decided to join forces with local and Chinese expert to form SIMBA, which will offer a brand new concept for Chines-Israeli partnering. SIMBA is a partnership between Shirat Enterprises, IVC Research Center and Chinese based private equity fund Mingda Group. We believe each partner brings to the table a unique strength that will create a new whole larger than the sum of the individual parts. With Mingda Group in China, IVC in Israeli and Shirat at both countries we hope to facilitate a more streamlined channel of communications between Chinese and Israeli companies, this helping interest and needs transform into deals. .

We have already escorted a first scouting delegation for companies from the Shanghai area, and hope to find the scouts a number of potentials companies for introductions. While we are not yet a liberty to disclose more details, we hope to be able to spread the word and share more with our friends and members soon enough. In the meantime, if you're looking for a Chinese investor, trying to penetrate the Chinese market or need any further insight into this high-potential-yet-complicated market, please don't hesitate to approach us. I am sure that between us and out SIMBA partners, we'll be able to help you find what you're looking for in China, Israel or both. 

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