Israel: An Empire Of The Mind

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This bible was printed hundreds of years ago in #Spain and was lost during the Jewish deportation. It was found in #Syria and became part of rare books collection at the #nationallibrary in #Jerusalem where 5 million books are stored over 9 Kilometers of book shelves. Touching and seeing this cultural treasure gravitates your emotions and your soul to our people, and to the people in our region. (at National Library of Israel)

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Dear friends,

As you may know, our Technology Impact Investment platform #Impact1st, is making investments in Israeli socially driven technology startups that are making an effort to make our world better. here is a story about one of our portfolio companies, #AngelSense, which developed solutions for autistic children. in the below link you can read about a new case where once again, #AngelSense saves another child:

http://www.nydailynews.com/new-york/bronx-mom-credits-gps-finding-missing-autisic-son-article-1.2478322?utm_content=buffer738ec&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer

We are proud of this Israeli technology based solution that helps people all over the world.

[chemiperes]

לחייך שהיו טובים ומלאים. אזכור אותך תמיד חבר יקר

[chemiperes]

פרידה מצחי פישביין חברנו האהוב

צחי אהוב. ליוויתי אותך שנים רבות, מקרוב ומרחוק, מאז נפגשנו לראשונה בכיתה ט-2 בבית הספר התיכון "אורט טכניקום" בגבעתיים, שם חלמנו להיות אדריכלים. היית נער יפה תואר, שובה לבבות. בפעם הראשונה בה ראיתיך עלה על פניך חיוך רחב, ועיני התכלת שלך הצטרפו לצחוק החם שלך, שלא היתה בו טיפה של זיוף ולא נימה של מבוכה. חשבתי על היום הזה אתמול, כשוורד סיפרה כמה אהבת את השיר "הנה באה השמש". כמו אותה השמש הטובה שבאה, הכנסת אור לחיינו, ולחיי משפחתי. אמא שלי התאהבה בך מיד. ואני יודע כמה אהבת אותה. היית בן בית אצלנו. היית מלך הכיתה. מלח הארץ. ברוך כשרונות, תלמיד מעולה. ידעתי שתצליח בכל אשר תפנה.

בתום ימי התיכון נפגשנו שוב בקורס הטייס בבסיס חיל האוויר בחצרים. התגייסתי מחזור אחריך. אסרו עלינו לדבר עם חניכי הקורס, אבל כשהבחנת בי רמזת לי להתגנב אל מאחורי אחד הבניינים והסברתי לי מה עלי לעשות, איך להתנהג, מה לאמר ומה לא לעשות בשום פנים ואופן. הנוהג הזה הפך אצלך להרגל וכך נהגת גם עם גילה אשתי ועם ילדיי, וכשגדלו הגעת גם אל בני ובנות הזוג שלהם, ובכלל – אין חבר בעולם שיכול היה להמלט מעיניך הבוחנות, מדאגה עד לפרטי פרטים – ותמיד מחמיא, מעודד, ומשבח ומציין מה יש לשפר. אינני זוכר חבר אחד שלא ראה בך חבר בלב ובנפש. לימים, הפכת לטייס קרב והתמונות שבסלון ביתך הן עדות לכך שאהבת כל רגע בו שירתת בחיל האוויר אהבה עזה. אפילו שיתפת את חבריך בכאב הפרידה ממטוס הסקיהוק שהוצא לאחרונה משירות.

ליווינו אותך כיזם וכמנהל חברת אופיס דיפו, שמשרדה הראשון נמצא לא רחוק מכאן, סמוך אל מקום מנוחתך. בנית חברה לתפארת, שסיפקה פרנסה לאלפי אנשים בישראל. הייתי גאה להמנות על חבריך, ושמחתי על הפרק החדש בחייך בו הקדשת מיכולותיך ומנסיונך לשירות ציבורי. כל מה שעשית בא מעומק הלב השלם, באמונה, בנחישות, וללא פחד. אצלך הכל היה אפשרי, ושום דבר לא היה מובן מאליו.

אך יותר מכל, היית חבר נפלא, חבר למופת, מהבודדים שהיו לי אי פעם. חברות שנמשכה למעלה מארבעים שנה. זמן שמספיק לחצות מדבר, ולגדל דור חדש. דאגת לחבר בין חבריך הרבים והקרובים שנמצאים כאן היום, אחד לאחד. היית אדריכל של אנשים שמקים ובונה חברויות מוצקות. בספר קוהלת, פרק ד' נאמר: "טובים השניים מן האחד, והחוט המשולש לא יקרע". לי היית תמיד בבחינת "טובים השניים", ולנו, לחבריך ולבני משפחותיהם, היית החוט המשולש, שלא ייקרע.

עמוק הצער וגדול הכאב בליבנו עת עלינו להפרד ממך חבר יקר, נדיר ואהוב כמוך. היית מלא תוכניות כרימון. מותך הפתאומי, הבלתי צפוי, נפל עלינו כמו רעם ביום בהיר, זעזע את כולנו עד היסוד, מותיר אותנו המומים וכואבים. ככל שנוקפות השעות, גילה ואני איננו יודעים את נפשנו, וחושבים עד כמה אהבנו אותך, וכמה עזים הגעגועים הממלאים את החלל שהותרת בליבנו. נוח בשלום חבר יקר ואהוב. חברות חד פעמית שכזו אינה מובנת מאליה, והיא נצורה בליבנו. אני מקווה שהיינו ראויים לך.

[chemiperes]

Spitfire in the sky above the Peres Center in Tel (at Peres Center for Peace)

[chemiperes]

Post 18: Paving the China-Israel Economic Highway(Observations from “Circle One”)

Dear Friends,

The China Israel business collaboration model is changing these days from Joint ventures in China to overseas strategic investments. This change is unleashing enormous economic potential never seen before. China will soon establish itself as the most important strategic economic partner to Israel’s eco-system, second only to the US.

In the past, Chinese counter-partners suggested collaborating in the frame of “Joint ventures”. Such model calls for setting up a partnership framework in China, with international financing, focused on the China market. That was the modus-operandi between US and Chinese companies (i.e. 3Com created a $300M JV with Huawei).

Nowadays, in the Israeli eco-system, Chinese are implementing an “overseas investment approach”. For the first time, Israeli funds raise money from Chinese LPs. We see M&A activities targeting Israeli companies (Adama was acquired by Chem-China, Alma Lasers acquired by Fuson and there are ongoing M&A discussions with “Tnuva”, the leading Israeli Dairy Company as well as with The Phoenix Insurance Company). Chinese strategic corporations are setting shops in Israel (as recently was announced by Lenovo who is setting up R&D Center, following other ones).

Baidu, Alibaba Tencent and Xiame (aka BATX) are exploring direct investments and partnerships in Israel, searching for core technologies in the areas of Big Data, Cloud Computing and Data Centers Infrastructure, and more. Private Equity funds are making significant direct and pre-IPO investments (such as the PE Fund Sailing investment in Mobileye). Giant companies make direct investments in startups and mature companies (PingAn, for example, invested last year in 6 Israeli companies, mostly in the "FinTech" domain, among them are eToro, the world leading Social Investors’ Network, and Payoneer).

Israeli companies used to initially launch their businesses in the US, in order to gain credibility and success. Only then, they will make an attempt to expand their reach into the more complicated “ROW” (“Rest of the World”) markets. Visualead is an Israeli QR Code Start up Company (www.visualead.com) focused on the China market. Their management team relocated to Shanghai. Following the completion of an angel round of financing, they were backed by the Internet Giant Alibaba. While starting in China is challenging, I believe the number of such “China Market First” companies may grow in the coming years. These companies will expend their business into the ROW markets following their initial success in China.

A flow of Chinese delegations consists of Government officials, business leaders, executives and academicians arrive in Israel every other week, pursuing a growing number of business and collaboration opportunities in Israel. A great deal of interest is demonstrated in the areas of food security, healthcare, IT, energy and education among others.

The Israeli economic and business community should pay attention to the rising economic interest in Asia Pacific in general, and in China in particular. The Israeli ecosystem will slowly pivot from "US primarily" orientation, towards the orient, creating a more diversified and balanced source of opportunities. We need to learn the culture and values and we need to learn how to listen. We need to adjust to a new area of global changes.

While there are more English speakers in China and India than in the US, and communication is improving, teaching the Chinese language at Israeli schools in addition to English could be proven to be beneficiary, as English and Chinese will open most of the global doors for the future.

As the China Israel economic model evolves, the bridges between our two countries, cultivated by pioneering business leaders from both ends, with the support of "China pioneers" may become the foundation for a highway, leading us from today’s world into a new age.

[chemiperes]

Next trip to Turkey #Ataturk airport look for @travelersbox, made by a @pitango portfolio company. Insert your Turkish money or any currency and use digital money on the Internet! (at Istanbul Ataturk Airport (IST))

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Women entrepreneurs in #MECCTechForum. A new age for the Middle East - innovation, Entreprenuership and a better future for all (at Istanbul Marriott Hotel Sisli)

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Painted by @guyperes AMAZING!

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Next time in #istanbul go to #Zorlu Center. Great shopping experience, brands, @Raffles hotel and beautiful office spaces

[chemiperes]

Middle East high tech gathering #MECCTechForum. On stage US, Israel, Turkey, Saudi Arabia, PA. (at Istanbul Marriott Hotel Sisli)

[chemiperes]

Post Seventeen: Impact Investments and the Start-up Nation (Observations from “Circle 1st”)

Dear Friends,

In the business world today more and more people worldwide are looking beyond financial gain and are getting more engaged in making a positive impact on the world. A more holistic approach on capital is moving to the mainstream, aligning capital gains with social impact.

The field of impact investing reflects this trend, bringing the social and business worlds together for the best of both worlds. As the fastest growing trend globally, it challenges individuals, corporations & foundations to build sustainable solutions for a better world.  Based on JP Morgan's latest report, the current estimate of total global impact investments activities was about $42B in size in 2013, and they expect to see this market grow to $400B yearly within the coming decade. http://www.thegiin.org/binary-data/2014MarketSpotlight.PDF

 The world of impact investing ranges from sustainable non-profits to for-profit companies that all serve the purpose of making positive social impact. Each model provides a different solution, together serving all flavors.  

No doubt the world is embracing innovative models to create both financial and social returns. 

In Israel, Impact Investing is a new and growing trend. For the past few years, several Israeli organizations have been very active in building the social finance market in Israel. We now see activities within the non-profit range, local social businesses and social-tech steadily growing and raising much interest.

From the early 90's, Israel has positioned itself in the world as an empire of the mind – a high-tech powerhouse, proving itself as a significant global player in innovation and entrepreneurship.

In the second quarter of 2014, $928 million – the highest quarterly amount since 2000 – was raised by 174 Israeli high-tech companies and in 2013 the total amount of exists was $2.1B.

However, none of these companies are built and aimed primarily and directly at addressing social challenges, even if many of them contribute in certain ways toward making our world a better place.

We want to change that by introducing Israeli social-tech and lead the industry of technology for global social good. Israel has an abundance of tech entrepreneurs whose wish is to change the world.

My partners at Pitango and myself have always been active in social programs. We believe that impact investing is the right tool to leverage our experience with technology companies to create global social impact. We teamed up with Impact First Investments, the first Israeli social-tech management company, to make that happen (www.impact1st.com)

Together we are promoting for-profit tech companies built for the greater good. We are looking to establish this industry by introducing capital and expertise that will enable Israeli entrepreneurs to tackle global social challenges with technology solutions.

Our goal is to support tech companies that will create global social impact. Our aim is not the financial ROI but rather the Social ROI, looking to maximize stakeholder value before shareholder value. We do this as part of our Pitango Community Ventures arm and are engaged on a personal level to make this a success.

One example of such a company is AngelSense (www.angelsense.com). This is a company providing a solution that helps protect children with special needs by providing them and their parents with a smart analytics system. The system "learns" the child's routine and alerts parents via smart phones when an irregular event is occurring in real time. An event like this can be a different bus drive, an irregular stop or an emergency of other kinds. Parents can then choose to check the child's status, listen to the child's surroundings and later show the child pictures of the places he visited during the day. The system can prevent abuse, and provides peace of mind to the parents. See parents' testimonials here: AngleSense Parents testimonials

It comes to mind that we are really creating a new circle around my blog’s original 3 circles. Let me call it “Circle 1st” - where I will write about our Pitango Community Ventures.

[chemiperes]

The Empires of the Future are the Empires of the Mind

Winston Churchill

Opening Post

Dear Friends,

I am not sure why now, but better late then never. I decided to start posting some of my thoughts in this blog. And it will be mainly about the Israel high tech scene and our region, but not only. I hope to focus on things I care about, which I hope you will find an interest in.

My business life and areas of interest can be drawn, in a way, by 3 concentric circles:

The first one is about making Israel “an empire of the mind”. It relates to my work at Pitango Venture Capital , which is the largest venture capital group in Israel. Today, with 20 years of venture investments, with an exciting portfolio of more than 180 Israeli high-tech high-growth companies, and after raising 6 funds with a total of $1.6 Billion, I came to the following notion: I believe Israel should continue to be a state of science and technology, focus on innovation and further grow our economic export, where technology is in the heart of our economy. Remember what Churchill once stated: The Empires of the Future are the Empires of the Mind. We need to make sure Israel is, and will always be - an empire of tomorrow - an empire of the mind. Today we invest out of Pitango Fund VI. As we build our portfolio, we share the feeling that we are on the verge tremendous growth in the high tech sector in Israel - great ideas, outstanding entrepreneurs, and bigger-than ever market opportunities. We are moving from an EXIT driven market (and culture), to building companies that will becomeglobal category leaders.

  The second circle is about investing in the non-participating communities in Israel.  Specifically I am referring to the Israeli Arab minorities. 1.6 million people, highly skilled and highly educated who are not an integrated part of the “Start-up Nation”. They represent more than 20% of our society with less than 8% National GDP (Gross Domestic Product). It is a No EXIT. No IPOs (Initial Public Offerings) and no M&A activities (Mergers & Acquisitions). No funds available for this community. We at Pitango formed a Private-Public partnership, with the Israeli Government (This is a model where the Government and the private sectors work together. A model I believe in, and think much more needs to be done this way). We raised $50 Million in our first Al-Bawader Fund, and this is the first VC (Venture Capital) and PE (Private Equity) Fund investing in the minorities. We set up an office in Nazareth, and have invested so far in 7 portfolio companies. The quality of the founders and the business opportunities falls no short of many of the 5000 start ups in Israel. We are looking forward to seeing our first EXIT which will drive more entrepreneurs in the Israeli Arab scene. Important to say - while we thought we are going to make investments in manufacturing and services, we found ourselves investing a lot in Internet and Enterprise Software. Al-Bawader, just like its elder sister, Pitango, is investing in our traditional strategy - be diversified by technology sectors, and be diversified by portfolio stages. From seed stage - to succeed…

  The third concentric circle of interest relates to the Middle East region. We found a great acronym: TIME (Turkey, Israel, Middle East). Turkey is an impressive economic power, that just recently hit the $1 Trillion GDP level. I strongly support the Israeli PM’s decision to renew our relationships with Turkey after 3 years of wasted time. As our President said in an interview today - “I can see one million reasons why Turkey and Israel should be friends, and not even a single reason for not being friends”. So Turkey is a real power in our region and a model for many countries in this part of the world. Israel is an Empire (of the Mind…). But in between we have a region we need to start. From the start up nation to Turkey we need to have a “Start-up region”. 22 Arab countries share the same langue. 350 Million Arabs will be a huge Internet Market, where fewer than 100 Million are connected to date. I will soon post an article I wrote a couple of months ago, which I never publicized, and its title is -“The Arab Internet Spring - A Start-up Region”. The combination of know-how,  experience and entrepreneurial spirit Israelis share, coupled with the Israeli Arab community addressing the TIME markets, can be the secret sauce for the “Start-up region”. Arabic is the fastest growing language on the Internet today, soon to be the 4th largest in the world. Imagine what this Internet spring can do to this region, which is so young (average age is 26) and so slow to grow. It will drive jobs creation, Information proliferation, business efficiency and will change the face of the societies in this area.

These 3 concentric circles (all of them share the same focal point, which is innovation) will be the pools I will try to swim in, from time to time. I will try to share with you some insights as we continue and build our economy, society and neighborhood.

I would like to dedicate this first blog-post to Turkey, and wish that what happened in the last 3 years between our countries will soon be forgotten, while we will always remember to embrace peace.

May god bless us all.

BEST

Chemi

[chemiperes]

Adopting Strategies for the New Year (“Observations from All Circles”)

Dear Friends,

As the year 2013 has just ended, it is a good opportunity to reflect on my 2013 blog posts. Looking forward to the new year to come, I would like to draw some insights and observations, all of which I am happy to share with you.

I believe it is time to adopt two innovation strategies, as I believe that innovation is the main driver of human progress, and that it affects our lives more than any other factor that we consider when thinking about tomorrow.

 The first strategy that I recommend every person, company, and country around the world to adopt is a“Technology Strategy”.  The global economy is expanding as a function of growth and advancement in two dimensions: the marketplace and innovation. The first, or the X-axis, refers to “demand”. It represents “middle class” growth, and is all about marketplace opportunities, i.e. BRICS and MIST. More people are joining the circles of higher standards of living, and are thus, with an ever-growing demand, calling for more of everything, including food, energy, water, infrastructure, data and networks, utilities, housing, transportation, and so forth. But the X-axis demand depends on our ability to innovate, or “do more with less”.

 While many of us have developed market strategies to address the X-axis expansion, we are at a point where we cannot continue without the help of the Y-axis, or the “supply”. This is where innovation strategy comes into play. The Y-axis will affect every aspect of our lives on the X-axis. In contrast, Y is not a marketplace; it belongs to individual innovators, outstanding companies, and creative societies. It is a necessity that both X and Y come together – no more “high-tech” and “low-tech”. It is time to merge the two together, and constantly “innovate on Y” in order to “provide for X”.

 Just think of how many new “Y-words” we have learned in recent years, and how they have affected the X-markets. Here are just a few select examples:

MOOC (“Massive On-Line Courses” - Education)

Blogs (Content and Expression)

Social Networks (Social Life)

Cloud Computing (Computational Resources)

3D Printing (Discrete On Demand Production)

Big Data (Data)

Predictive Analytics (Analyzing the Future)

Cyber Security (New Threats in the Digital World)

Internet of Things (Connecting Elements)

Wearable Devices and Google Glass

Smartphones

Smart Grid

App Stores

Download / Upload

Dropbox

And the list goes on and on. Technology results in disruption of slow changing X-companies and X-industries, while creating new X-jobs. How many jobs will be eliminated due to Y, and how many new jobs will be created to feed X? X-axis job security is declining, and as a result, we are becoming a “startup world”. Going forward, we will have to become more entrepreneurial than ever before, and ready for constant change. It is time to adopt Y strategies.

The second strategy that I recommend to adopt is the “Inclusivity Strategy”, which relates to the power of innovation. The tension between Y-axis creative societies and X-axis market demand must be reduced. As we move forward at an ever increasing pace, a social division risk is being created between those who are driving the Y-locomotive and those who are operating the other X-parts of the train. We cannot afford to slow down, and yet we cannot allow for exclusivity. We need to develop strategies on how to bring together the non-participating parts of our societies, whether this refers to minority sectors or those from any other exclusivity basis, be it gender, belief, or other. Inclusivity strategies should be adopted on both the X-axis (haves, and have-not) and Y-axis (locomotive and train) dimensions.

Our world is growing bigger and more complicated than ever before, and so are the opportunities and risks we are facing.  It is time to reflect, and decide what strategies we should adopt as we enter 2014.

As always I will be interested to hear from you.

[chemiperes]

New York, an Israeli Start-up City (“Observations from Circle One”)

Dear friends,

For many years, the City of New York represented the US and global financial center, whereas Silicon Valley represented the heart and soul of innovation and entrepreneurship. This is why New York was always an Israeli high-tech companies’ focus when they were going public on NASDAQ or NYSE, but when focusing on building start-up companies, most Israeli entrepreneurs still continued to fly out west to set up headquarters in the Valley.

But today, Israeli high-tech firms are more often choosing New York over Silicon Valley when deciding where to set up shop. Why? First, in the new “Digital consumer-age” in which we live, it’s becoming less about the need to manage development of complex technology, which is done in Israel, and more about being closer to your business partners and customers which create the eco-system, allowing you to feel the market “vibes”.

Secondly, the media and advertisement markets are undergoing a fundamental transition to digital, from off-line to on-line, and then everything needs to become mobile. Due to its Eco-system and life style, NY is becoming more attractive to “Ad-tech market” players.

Thanks to these two macroeconomic forces, the City of New York is following in the footsteps of the West Coast-based San Francisco and Silicon Valley, and becoming a hub for technology and entrepreneurship. With already more than 2,000 start-up companies, New York City is changing its nature towards the digital age of technology and innovation. As the city is changing, more Israeli companies prefer it as a destination – after all it is just a “commute distance”, with comfortable flights, and time zone difference is only 7 hours… much more comfortable when you think about flying to Silicon Valley, and 10 hours difference.

Rather interestingly, Israel plays an important role in this major New York transformation. Already more than 10% of the technology companies in NYC are Israeli companies (more than 200 start-ups out of 2,000). See this map by Guy Franklin, an E&Y NY accountant: 

http://www.israelimappedinny.com.

And this is just the beginning of Israeli involvement in New York’s tech revolution. The southern part of Roosevelt Island, situated across the river, east of Manhattan, will soon be home to an advanced engineering and technology campus jointly designed and built by a newly created partnership between the Technion Institute of Technology, Israel’s leading engineering school, and the US-based Cornell University. When two academic institutions of that order of importance join forces on one campus, it will undoubtedly have a major impact on the landscape of the City.

Looking back, this “Start-up City” transformation can largely be credited to the outgoing Mayor Michael Bloomberg. As an entrepreneur, he founded “Bloomberg”, a “fin-tech” company which successfully combined the two worlds of Finance and Technology. As Mayor, he brought this vision to life, making NYC both a financial center, and a “Silicon Island”. Moving forward, it will be interesting to see how the City of New York will be changed as a result of the growing US/Israel strategic collaboration as well as the focus on science, technology, academics, and entrepreneurship. 

[chemiperes]

An Economic Model of Sharing (“Observations from Circle One”)

Dear Friends,

 As the Internet continues to grow and connect billions of people all over the world, it is also becoming more social, local and mobile (as defined in Silicon Valley as “SoLoMo”). In parallel, we are also witnessing the emergence of the “Internet of Things”, known as Machine to Machine Communications (or M2M), which connects millions and even billions of non-human elements from all areas of life, such as sensors, cameras, un-manned-vehicles, kitchen aid devices, etc. As these two networks converge, it seems that the global economy will be change dramatically, shifting away from product ownership and rental business models, towards a service-oriented “Sharing Economy”. We will share and use many more products, assets, and resources that today we prefer to either buy & own, or rent for a certain period of time, mostly  when traveling abroad.

 Today, we already see such changes in several business arenas, as well as for personal purposes. For example, the “Cloud Computing” infrastructure is designed to allow for small and medium sized businesses to share computing resources, and pay as they grow and increase utilization. More and more startup companies utilize the “Cloud” as their computing resource. These companies do not need to make costly investments in computing power, storage, and software ahead of time, knowing its utilization will be low and inefficient. On the other hand, big companies with excess computing power can save money by sharing it with other smaller companies via the Cloud infrastructure. But sharing resources are also applicable for personal purposes. People around the world share housing accommodations via the Internet in order to better utilize personal properties or other privately-owned assets such as an extra room at home that can be used by tourists or business travelers, or an unutilized parking lot/garage that can service someone who is looking for a parking space.

With that in mind, let us look at tomorrow’s world of urban transportation. For example, new cities are being planned and built with a smaller “footprint”, which translates into building high rises and reducing the urban area in order to increase infrastructure efficiency – often in order to deliver energy and water, or to collect and dispose of waste. As a result, people are using higher vertical transportation (elevators), while horizontal transportation routes grow shorter. Still, we need to use our own cars or public transportation to travel long distances. But as we do not own our own elevators, why own our own cars? Why can’t we use “horizontal elevators”, so to speak?

 Today, driverless car technology is becoming safe and is already being adopted by several states in the US that are issuing the required regulations for driverless cars, such as the ones Google has developed. With sensing and imaging technology, GPS, and advanced navigation systems, cars can reach destinations with no human intervention, while driving according to safe driving rules with no collisions. Airliners fly most of the time automatically and can even land on the ground and taxi to their designated gate safely – so why not cars? The Internet of Things connects devices so that everything can be coordinated, monitored and controlled via the Internet.

Such technology advancement and efficiency will reach a point where cars can be shared as an “on-demand” resource, just like an elevator. Car ownership is expensive. Parking spaces are not utilized during most hours of the day, and we need to service our cars, fuel them, and park them. Imagine transportation as a “Cloud-shared” resource.  By using an application, you can order any kind of a vehicle on demand that will fit your specific needs at certain times. You can use an electric bicycle if you are alone and riding a short distance in nice weather, order a bigger car if you need to drive long distance with your family members, or even have a pickup truck when you need it. Your “Shared vehicle” will pick you up at the time and place you define, and drop you off at your final destination. No need to park it or service it. Not to mention that your personalized content will be available for you via the Internet – your videos, music and other types of content, as well as your personal mobile communication, which can be accessed using cloud technology.

As we are more connected, and as social trust grow, our economy will drive us to share more products and resources, and in a way, capitalism will be shaped in a more socialistic way. We will own less, and rent less, and most of our needs will be translated into services shared by communities. We are moving towards an era of an economic model of sharing.

[chemiperes]

The Growing China-Israel Technology Collaboration (“Observations from Circle One and Circle Three”)

Dear Friends,

 Over 90% of the funds that help create innovation in Israel come from the U.S.

However, in the next decade, we will see strengthening ties between Israel and China, where China will become a dominant strategic partner of the high tech industry in Israel.

 We have always felt there to be great potential for China-Israel collaboration in the high technology business. China’s economy is the second largest economy in the world, and continues to grow. Because technology implementation is an important factor for maintaining this position and trend, and as Israel has innovative technology solutions to offer, we are beginning to see a growing Chinese interest in Israel, alongside a growing Israeli business interest in China. I believe that in the next decade, China will establish strong ties with Israel. This is because, while the US and Europe are still the major players in the Israeli high tech scene, Chinese investors and strategic corporations are beginning to show a growing interest in entering the Israeli innovation market, and are looking for ways to both form strong relationships and build a presence in Israel.

 Over the last several years, we have seen more Israeli companies beginning to generate revenues in Asia-Pacific, specifically in China. China represents a huge market with great demand in a number of sectors such as energy, water, communications, agro-industrial, healthcare and others. In many cases, Chinese entrepreneurs not only try to close gaps, but rather try to leapfrog old technologies on the way towards new, cutting-edge solutions. For Israeli companies, these are perfect conditions for collaboration.

 Unfortunately, although the prospect is exciting, the China-Israel economic collaboration is far from where it should be. If we want to build it to the next level, we should compare it to the successful US-Israel model. Bi-national strategic relationships, such as that which the US and Israel have, are rather broadly based on all elements of the technological “economic food chain” – academia, education, entrepreneurship , venture capital investments, M&A and public offerings in capital markets, and so on. Most of the funding that flows into the 5,000+ startup companies in Israel is colored “Green”.

 But in order to be able to use the US-Israel model to help us with China, we need to understand how it works. Basically, US investors finance the VC community, which, in turn, invests in startup companies (both Israeli “originated” and international funds raise money, however, mainly from the US). Israeli companies prefer to either go public in the US Capital Markets or go the M&A route, and most of the M&A activity is financed in US dollars. Just look at the recent acquisitions of Waze, Trusteer and AdapTV, or at the nearly 250 global R&D centers in Israel that were established or owned by US companies like Apple, Cisco, eBay, EMC, Facebook, Google, IBM, Intel, and Microsoft to name a few. Not to mention that hundreds of Israeli companies are headquartered in Silicon Valley, New York, and Boston, and many Israeli entrepreneurs and executives are educated in the US. In fact, out of 2,000 startup companies in New York, 200 of them have an Israeli nexus. This partnership has essentially been nurtured over decades – we share common values, and have a similar entrepreneurial culture and spirit. The US is still Israel’s most important strategic partner, and I assume it will stay like this for a long period of time, if not forever.

 At the same time, the Chinese are becoming more aware of additional models of cooperation. The traditional Chinese “Joint Venture” approach is diverging into new and alternative approaches, and more people are following in the footsteps of US players. For example, quietly and under the radar, Chinese companies recently established several R&D centers in Israel. Other private Chinese groups are investing in Israeli venture capital funds, with no Israeli cross-border investment contingencies. A few Chinese acquisitions of Israeli companies have been completed (the most recent one being “Alma Lasers”, which was acquired by Fosun Group), and more and more academic collaborations and students exchanges are springing up left and right. Recently, Mr. Li Ka-shing made a $130M donation to the Technion Institute of Technology as part of a project to build a joint China/Israel Campus in China, just like that which the Technion and Cornell University are contemplating doing in NYC.

 But it doesn’t stop there. Chinese PE and VC funds too are exploring overseas investment programs, and Israel is a “natural” destination for such an effort, as many Chinese delegations and missions have already visited or are visiting the “Startup Nation”. Government to Government visits, or “G2G” visits, are starting to take place, which are highly important, especially at such an early stage in the relationship. The Chinese are learning about G2G projects by looking at the great work that has been conducted by the US-Israel G2G BIRD Foundation over the last few decades in financing and endorsing US/Israeli companies’ in their efforts to develop strategic collaborations with one another.

 In addition to following in the footsteps of the US-Israel model, Chinese investors are also developing their own agenda with regards to the broader Middle Eastern and North African (MENA) regions. China will enter the Middle Eastern Internet market as well, and will try to capitalize on the growing Arab Internet opportunity. While US Internet companies are expanding their operations into Europe, South America and other potential markets around the world, Chinese Internet companies are targeting markets for growth. MENA is a region of interest to China as it has a youth bulge that is starting to build an Arab-speaking Internet market, as well as an African Internet play. For example, one of the largest Internet players in China, with whom Pitango has already met, has an active R&D Center in Egypt.

 We are just at the beginning of the Chinese era in Israel. China’s focus on Israel will continue to grow, and so will its interest in MENA. These two trends offer opportunities for cutting-edge Israeli technology companies (“Circle One”) as well as the region as a whole (“Circle Three”).

 This blog post will also be published by Calcalist in Hebrew www.calcalist.co.il.

For this post in Hebrew, please visit: http://www.calcalist.co.il/local/articles/0,7340,L-3613431,00.html

 As always, your comments are welcomed.