Kuang-Chi, a Shenzhen-based technology conglomerate, recently launched a $300 million Israel fund in Tel Aviv to tap the country’s smart-city know-how, according to the company’s founder Ruopeng Liu.
“Kuang-Chi is the first Chinese corporate VC and incubator that leverages the capabilities of the Israeli market together with the distribution, sales and marketing and technology development in China,” said Dorian Barak, managing partner of Indigo Global, Kuang-Chi’s partner in Israel.
With a valuation of over $10 billion Kuang-Chi is no stranger to early-stage investments, with a portfolio that already includes Solar Ship Inc., Martin Aircraft Company (ASX:MJP), biometrics pioneer Zwipe and communications group HyalRoute
In Israel, the company’s Kuang-Chi GCI Fund & Incubator has already made its first investment: A $20 million commitment to eyesight Technologies, a machine vision company.
“Israeli entrepreneurs tend to have very big ideas, but there are limitations in the local market; we can help these companies to take big leaps,” said Liu.
Like many of his peers in China, Liu is looking to take Israeli tech to a global audience. And the first stop will be China.
The country’s smog-choked, populous metropolises are a perfect testing ground for Israeli technologies aimed at “smart cities,” which is a main area of focus for Liu’s fund.
With the rapid expansion of its urban population, Chinese cities suffer from environmental pollution and a shortage of resources, like potable water. Considering the difficulty of sustaining the country’s megacities, it makes sense for China to cozy up to Israel to adapt to the changing landscape. For example, Israeli water tech should be a shoo-in for China’s growing needs.
“With the future city, we emphasize two points: environment and safety. We know the severity of the problem in China and desperately need technology to monitor and track the real data of environmental change,” Liu says. “And the other part is safety, for example against natural disaster and disaster relief… 3.5% of Chinese GDP is lost because of disasters. Chinese cities are crowded and if something happens, many people will die.”
The launch of the fund is the fruit of nearly a year of negotiations with local Israeli players, and is potentially the first step of a multi-pronged approach to Kuang-Chi’s involvement in the technology scene.
The company’s new fund also is indicative of the flood of technology investments coming from China into Israel. Chinese investment into the country is growing by 50 percent annually and is expected to increase.
Despite China’s reputation as a copycat nation, the country’s economy is evolving as it gains more exposure to technology startups internationally while investing heavily in research and development efforts at home.
According to Liu, Kuang-Chi works with municipalities who have a keen interest to see their cities avoid natural disasters and overcrowding, operating with the support of the Chinese government.
And in terms of investment, the firm intends to be stage-agnostic. “We are not financial investors. We don’t care about the stage, we only care about what they are doing. It could be a one person company or a 100 person company,” said Liu.
Based on Liu’s vision, there are a number of Israeli companies that might fit the bill.
“We are looking at robotics, aviation and at anything that makes machines behave and understand human behavior, “ Liu says. Kuang-Chi is also on the lookout for virtual reality investment opportunities.