Israel is known for its financial and technological prowess. It’s one of the clear leaders in global innovation, plus one of the few countries in the world which holds more credit than debt. That being said, it goes without saying the country has one of the most prominent fintech sectors in the world. Forty-three Israeli fintech companies raised capital between January and September 2015, a remarkable feat.
But they aren’t considered #1, at least not yet.
That could all change with the debut of the Floor, a vertical-focused fintech hub in the heart of Tel Aviv with the $2 million backing of Chinese investment firm the Pando Group. Israel has a lot of competition from London, New York, Hong Kong and Singapore when it comes to financial technology, but Pando’s commitment to connect Israeli startups with the Asian market could be a game changer.
“The Floor wants to create a complete yet diverse ecosystem of stakeholders such as fintech entrepreneurs, banks, insurance companies, service providers, regulators, investors and tech companies,” Gil Devora, Managing Partner at the Floor, told Geektime. “We have partnered with four of the largest international banks to ensure geographic coverage of global markets which can help Israeli startups reach any market in the world, thus tripling the number of international banks in Israel doing innovation operations locally.”
That input includes building bridges with venture capital groups around the world and in particular Asia. They already have three Asian banks locked down among their institutional supporters. The Floor will come jampacked with 1,600 square meters of collaborative workspace, an R&D center, event hosting and a “growth” program. That growth program also wants to set itself apart from the typical incubators and accelerators startups have grown accustomed to.
“This is not an accelerator/incubator but an opportunity for companies in various stages to work on a particular challenge or theme that each bank can define beforehand, and then work closely with an innovative company in a dedicated time and period to create an appropriate solution for that problem,” Devora added.
Up to 25 companies can rent office space at the floor while membership in general will get companies access to international financial players, venture capitalists and other mentors. These mentors include Mariano Belinky of Santander InnoVentures, Keren Chavkin-Lior of HSBC and Neil Cuthbertson of RBS. It also helps that Israel’s cyber security sector helps make the country a hub for IoT, blockchain and cognitive computing technology.
“In particular, the intensive Israeli R&D being done in the IDF and expertise in fields such as cryptography and Big Data creates a constant flow of innovation to create the perfect match when partnered with the global financial industry,” he noted.
Bringing Israeli and Chinese innovation together
The Pando Group currently manages a $250 million fund with a focus of bringing Chinese capital to Israel. There has been a lot of effort to amplify technological and financial ties between the Israeli and Chinese ecosystems over the last couple years. Catalyst Private Equity and China Everbright Limited launched the “first” joint Israeli-Chinese investment fund just last month. Beijing also hosted the first China Israel Technology Innovation & Investment Summit in January.
“The investment in The Floor is based on the background of the managing partners in Pando Group (working closely with the local banks) and taking into account that five out of the 10 leading banks in the world are from China,” Oded Ron Edoute, partner at the Pando Group, told Geektime. “Pando plans to introduce Israeli vendors to major banks in China, HK and Singapore and hopes to open similar hub in China based on the experience gained in Israel.”
The investment strategy here would give Pando the inside track on the big ideas and to filter through companies with the most potential. According to Edoute, Pando expects that it will be able to bring a major return on investment through all the funding that comes through the Floor, even with so many industrial partners also looking to invest.
“The fintech market in China is also growing fast, yet there are still some cultural gaps that will require fine tune of the solutions provided by the vendors. We believe that working closely together and in some cases being sponsored by the major players in China will move things faster and will create mutual interest,” Edoute explained.
The Floor is managed by general partners Moises Cohen, Avi Cohen and Gil Devora. They also maintain a staff of eight.