Jerusalem Venture Partners announced today that Alibaba is investing in JVP, Alibaba’s 1st Israeli VC firm. In an interview with Geektime, JVP’s managing partner explains why
Jerusalem Venture Partners, one of Israel’s leading venture capital firms, announced today in their annual meeting that Alibaba Group is investing in JVP and becoming a strategic partner, according to Geektime sources. This marks the first time Alibaba has invested in an Israeli VC firm and the second time it has invested in Israeli tech: In January, Alibaba invested approximately $5 million in Visualead, an O2O tech startup, to let consumers identify genuine products from fake goods using Visualead’s technology.
According to Israeli site Calcalist (in Hebrew), Alibaba will invest tens of millions of dollars in JVP, though these figures could not be confirmed. Globes reports that JVP’s managing partner, Kobi Rozengarten, made the connection with Alibaba.
Alibaba has brought 20 representatives to Israel this week to meet with JVP and other Israeli tech companies.
China is eating up Israeli tech
In the past two years, Chinese investment in Israeli tech has soared. As reported in the Wall Street Journal, Israel’s National Economic Council says tech deals between Chinese and Israeli companies amounted to $300 million in 2014, up from $50 million in 2013. Israeli exports to China have also more than tripled since 2009, and Asia may soon become Israel’s largest trading partner, beating out the United States’ longstanding hold.
During this time, JVP has played an active role in developing relationships with Chinese investors. In 2013, Kobi Rozengarten and Knesset Member Erel Margalit, who founded JVP, briefed Chinese politicians on a visit to Israel. Since then, JVP has lead various delegations of Asian investors, including one recently with Shengjing Group, which also launched a $1 million innovation contest with JVP.
The man who made the deal speaks to Geektime
JVP Managing Partner Kobi Rozengarten tells Geektime that, “China is becoming a major market for many of our companies. For Chinese leading enterprises, the best place for them to look for technology is Israel. Being a small company in Israel, you do not control the end customer in China, so there is no competition. We help with tech, design, and product, and they help with the market.”
When Alibaba “decided who is the best VC to go with, they found JVP,” Rozengarten explains.
He emphasizes that such strategic partnerships do not happen overnight, and that this was a relationship he developed over time. He also adds that because of China’s increased interest in developing government partnerships with Israel, “Being in Jerusalem, many are coming to visit us.” Beyond JVP’s success and knowledge of Israeli tech, he claims that they appreciate JVP’s hands-on style: “We have our own incubators. They love this structure.”
Though he could not confirm the amount of Alibaba’s investment nor which sectors it is most interested in supporting, he did emphasize Alibaba’s general interest in data startups: “At the general meeting today, we had a panel with so many people, they [Alibaba] were part of the panel. They covered so many spaces, with the explosion of data, there are so many areas to cover, it could be data storage, routing in the cloud, predictive analytics, big data, cyber, so many areas. The amount of data is going so fast that tech today can’t support many of the changes in data. It’s a real data explosion. That’s the reason that the incubator from Beer Sheva is so important.”
Indeed, JVP’s cyber security incubator in Beer Sheva, which was launched a year ago, has experienced a good deal of success. As we reported earlier this month, PayPal acquired predictive cyber security startup CyActive for between $60-80 million, which was incubated at JVP’s cyber labs.
It will be interesting to see which other Israeli companies Alibaba invests in: Our guess is at least a handful, and ones we’ll find out about sooner rather than later.