It was an off day in Jerusalem when we got the chance to sit down. Israelis were getting ready to read the Book of Esther in synagogues across the country that night for the annual carnival festival of Purim, but Jerusalemites were teeming at work. For historical reasons, Jerusalem’s Purim is celebrated on a different day than it is in the rest of the world. Even so, many workers from the 90-strong office live outside the capital, so they found themselves working from home for the day ahead of the festivities. I was lucky enough to catch Jon Medved between trips, waiting for the holiday to start.
OurCrowd had just announced a $10 million investment from Singapore’s United Overseas Bank, launching the hybrid VC’s first major venture in the East.
“It took us a year of engagement there to get the deal done. It was about a long courtship and knowing what we were getting into and that we were in this for the long term,” Medved told Geektime. Some of OurCrowd’s companies, like Trendlines, already have people on the ground in the city state. Others sound ready to follow.
“Singapore is a special partner of Israel,” he says, adding that, “If you look anywhere in the East then you’ll be hard-pressed to find a better ally than Singapore. Trade partners. Rumored defense partners. Upon landing there, you universally get to hear from the customs guy or taxi drivers, ‘I love that place,’ when they hear that you’re from Israel.”
Singapore seems poised to be the first stop on OurCrowd’s quest to expand its business worldwide. The initial announcement said UOB’s investment would focus on growing Southeast Asia’s fintech sector. But the big idea here is Asian investors are interested in getting in on the Israeli companies that populate OurCrowd’s portfolio.
“It’s not two-way, though,” he explains, noting that despite the wealth of innovation in Singapore, Israeli investors do not seem to be reciprocating with funding going back to Asia. “Singapore calls itself the ‘Smart Nation’ — they’re focused on smart city stuff, grids and very advanced healthcare. It’s a huge financial capital. They have all kinds of environmental [sustainable] tourism.”
All Asia, all the time
Singapore could fairly be assessed as the leader for startup activity in the Far East and Southeast Asia, but it has hefty competition from Beijing, Shanghai, Shenzhen and established technology manufacturing meccas in Tokyo and Seoul. Hong Kong is also making a push for Singapore’s regional lead in the fintech market. All that is playing out in OurCrowd’s ambitious strategy.
“My day is Asia basically. I finished now with a billion-dollar Chinese investment group who sent us a two-page agenda for the call that they wanted to go through meticulously,” recounted Medved. Medved pondered how you respectfully tell people like that, that you can’t go through their entire list of agenda items.
Spoiler: it’s not easy.
“In China, they want to have everything prepped and read beforehand. They like order and process, especially since the verbal communication is more difficult.”
China leads the pack on new interest in Israeli technology. January saw a conference designed for Israeli entrepreneurs to visit Beijing, the first joint Israeli-Chinese venture fund was announced in February, and new accelerator The Floor‘s mission is to link Israeli fintech startups to China.
It’s an organizational bonanza, if that sort of thing excites you. There is a lot of government investing, which can sometimes blur the line between private interests and public, confusing Westerners. Central planning also gives some industries an advantage they don’t have elsewhere like planning-intense smart city development. Medved told me that he felt like he had spent more time in China over the last year than he had in the United States, which should say something about the potential Chinese investors could have on the hybrid VC’s crowdfunding pot.
“We had a group of 50 at one point in the conference room, [then] this call, a the dinner the night before, etc.”
But the cultural differences aren’t that stark, even if they are noticeable at one point or another. Medved was fresh off the previous day’s activities at GMIC Tel Aviv when we sat down, where Chinese and Israeli players got the chance to commiserate and see each other’s toys. One panel examined those aforementioned cultural differences, where the speakers were asked how to overcome them. Medved thrilled at retelling how panelists felt they needed to fix a certain misconception for the audience.
“There were a set of interesting comments on the panel downplaying the cultural differences. But the guys working with us were educated at Harvard and Stanford, like, ‘We get where you’re coming from and we’re all about business. We’re playing by the rules.’ I thought that was an importance correction.”
In fact, Medved thinks the commonalities between Israelis and Asians (even speaking generally) were far stronger than Israelis’ common traits with innovators in the West.
“I’m excited about the cultural resonance. We have a lot in common. This is why Chinese respect Jews; whether it be our attitudes toward education, achievement, family or respect for elders. The difference between us and Silicon Valley is integrating the past into the process of innovation. I don’t think Silicon Valley has the highest degree of respect for the past. It’s inconsequential. It’s really about the future. Here, there’s an alternative model where we say ‘Let’s build the future but incorporate the past.'”
Asian enthusiasm for Israeli tech
Despite that, he opined that some entrepreneurs were looking to jump into the Chinese pool before they could swim. Many Israelis and Americans are simply unaware of the major players in the market, let alone staples of the Chinese technology space that are as ubiquitous there as Facebook and Twitter are for Westerners.
“‘Who here has heard of Cheetah?'” Medved quoted one of the presenters. Barely a soul in the room raised his or her hand, sans some of the organizers. Cheetah is the largest consumer electronics company in China, yet has no name recognition abroad. That is partially the fault of the Chinese, but it is the responsibility of expanding startups and their investors to learn the market. “Everyone is focused on how big it is,” but haven’t gotten into the nitty-gritty details.
“I think we’re starting with the fact we [in the West] don’t know who the players are, unless someone tells you they’re a multimillion-dollar player. They can’t name the top 20. ‘You know 5 Chinese companies and you expect to do business there?!’ It’s a whole world in and of itself.”
Israel isn’t turning away from Europe as much as it is turning to Asia
If you follow Israeli politics, you’ll know there has been some big fallout with the European Union over policy. But the threats and anxieties of people outside the tech community have been allayed by promises that trade between Israel and Asia is expanding. For the casual observer, that means the Israeli government is trying to get away from Europe as its main trade partner and sees the doors for Israeli business closing there.
That is not only an exaggeration, says Medved, but an impossibility.
“Europe has been traditionally Israel’s largest trading partner. You don’t want to write the EU off, but all of Asia is this huge thing. I don’t think this has anything to do with politics one way or another. The only difference working in Asia is that Israel is not a liability, but an asset.”
“Right now, it’s about business and the needs are clear not ephemeral. There are a lot of long-term secular trends showing no signs of abatement.”
Political positions don’t come up in Asia or Europe for the most part, but far less in the East than in the West. In any event, the developing economies of India and China are, to state the obvious for people living there and following their tech economies, developed at this point.
“I had 45 MBA students from Berkeley [visit us] in Israel, 30 of whom were Asian and hearing the accents of the questions. Five were from mainland China and some ABCs (American-born Chinese). Wake up and smell the green tea!”
That enthusiasm is just as apparent in Asian investors, who are trying to diversify their portfolios and are looking to piggyback on foreign innovation. Israel fits the profile perfectly as a place to find seasoned teams and transfer technology back home. But for the people racing to get to the Chinese market too excited not to do their homework, Medved thinks you should calm down. Things are just getting started for Israeli-Asian technology trade.
“We’re actually in the early dance, but it’s like an Israeli wedding — we are never late.”