Avi Cohen, CEO of The Floor, a Tel Aviv-based incubator of financial technology firms, hosts visitors, mostly Israel entrepreneurs, all the time. But, on a recent September weekend, his guests were 30 chairpersons of Chinese firms.
"Traditionally, Israeli entrepreneurs tend to look at Western markets for growth. But that is changing with the growing interest from Chinese investors," Cohen said.
The Floor was established eight months ago. So far, it has raised $2 million from Pando Group, a venture capital fund backed by China's Bloomage BioTechnology Corp Ltd. The Floor plans to open a Shanghai branch next year.
The investment is part of a broad trend unfolding in Israel, a global innovation hotspot which has become a popular destination for Chinese capital as China works hard to upgrade from a manufacturing hub into a tech beehive.
"Currently, every week, there is a Chinese delegation visiting Israel. They can be entrepreneurs, scholars or government officials," an official at the Chinese Embassy in Tel Aviv told China Daily.
In 2015, Chinese investments in Israeli startups and funds exceeded $500 million, showing a growth of 300 percent since 2012, data from the Israeli Ministry of Economy and Industry shows.
Tech giants such as Baidu Inc and Alibaba Group Holding Ltd, as well as players in traditional industries, have all joined the race. Last year, Chinese firms contributed 40 percent of money raised by Israeli venture capital funds.
"Israel's tech scene is a can't-miss these days," said Song Chunyu, vice-president of Beijing-based Lenovo Group Ltd. In charge of Lenovo's investment unit, Song visits Israel at least once a year.
According to him, the Middle Eastern country, which was ranked by Bloomberg as the second most innovative country in terms of R&D capabilities in the world in 2015, is highly complementary to China's economy.
"Israeli entrepreneurs are willing to spend years and decades on a specific core technology, but their growth is often limited by its small domestic market," Song said.
On the other hand, China, with a stable economy and a population of 1.3 billion, is a huge market but lacks ultra-modern technologies. "The two countries are a perfect match in the tech sector," he said.
Lenovo has so far poured $20 million into six Israeli startups, including Neura, a platform that helps users personalize connected devices while guarding their data.
It plans to invest $100 million more in local startups over the next three years to tap into Israeli talents.
Hila Engelhard, an official at the Israeli Ministry of Foreign Affairs, said: "China is like a giant computer and Israel can serve as a processor in it."
According to her, a big portion of Chinese money is flowing into areas like agriculture, medical technology mobile internet and other high-tech industries.
Chinese industrial conglomerate Fosun International Ltd, for instance, spent $240 million to acquire a 97 percent stake in Israeli medical tech firm Alma Lasers Ltd.
Last year, Baidu Inc invested $5 million in Tonara, which developed an interactive music education app, along with its Israeli VC partner Carmel Ventures. Prior to that, it invested $3 million in local video capture firm Pixellot.
