Chinese venture capital firm Pando Group invests US$2m in Israeli workspace for start-ups

PUBLISHED : Sunday, 06 March, 2016, 9:22pm
UPDATED : Sunday, 06 March, 2016, 9:22pm

A financial technology (fintech) hub in Israel has opened with the backing of Chinese investors to help connect Israeli technology with the world’s second-largest economy.

Chinese venture capital firm Pando Group has invested US$2 million (HK$15.53 million) in fintech hub The Floor in Tel Aviv, to create an academy for start-ups to learn about regulation, investment banking, retail banking and corporate banking.

The Floor will act as a hub for financial technology companies in Israel offering a co-working space, a research and development centre and potential partnerships with banks. Bank partners for The Floor include HSBC, Banco Santander and RBS.

“We believe that having a Chinese partner as a major stakeholder will lead in the short term to joint ventures between Israeli and Chinese vendors as well as banks,” said Oded Ron Edoute, general partner at Pando Group. “In the long term we could use the Israeli floor hub as a model and create a similar hub in China.”

The Floor and investors Pando Group plan to connect Israeli fintech companies with banks in China, Hong Kong and Singapore.

Tel Aviv is home to a growing number of start-ups and is ranked fifth in the Compass global start-up ecosystem ranking for 2015.

There are 430 fintech start-ups in Israel, according to the founders of The Floor.

Global investment in fintech ventures rose to US$12.2 billion in 2014, up from US$4.05 billion in 2013, according to a report by Accenture.

Pando Group’s investment coincides with a rise in mainland Chinese interest in Israel’s start-up community.

Chinese investments made up around 40 per cent of all venture capital going into Israel in 2015, Ziva Eger, chief executive of the foreign investments and industrial cooperation division at the Ministry of Economy of Israel,was cited as saying by Xinhua.

In January 2015, e-commerce giant Alibaba Group’s invested in QR code company Visualead, the company’s first investment in Israel.

Chinese internet giant Baidu has also invested in Israeli sheet music app Tonara and content recommendation company Taboola last year.

The Floor is a 1,600 square metre space and will be able to host up to 25 companies in various stages of development, according to Moises Cohen, general parter at The Floor.

Companies at The Floor can take part in challenges set by the bank partners, in areas including digital banking, capital markets, big data analytics, blockchain and anti-fraud, Cohen said.

The Chinese venture capital firm says its fund focuses on creating a “marriage” between Israeli technology and the Chinese market, according to its website.

Headquartered in the British Virgin Islands, Pando Group has previously invested in hair re-growth and teeth whitening companies.