HONG KONG—Chinese e-commerce giant
Alibaba Group Holding Ltd. said Tuesday it will invest in technology startup Visualead in its first foray into Israel’s technology sector.
Visualead, based in Tel Aviv, creates codes that consumers can scan with their smartphones. Alibaba didn’t disclose the investment size, but a person familiar with the matter said the Chinese e-commerce company is investing less than $10 million.
Quick response codes, or QR codes, are much more popular in China than they are in many Western countries; they have also gained traction in Japan.
In China, consumers have picked up the practice of scanning QR codes with their phones to download apps, redeem coupons or sign up for promotions. Many Chinese users have unique QR codes assigned to their social networking accounts that they can allow other users to scan to link or follow their accounts.
Visualead produces a patented form of QR code that uses colors and animation in an effort to be more visually engaging to consumers. Typical QR codes are black and white and are seen as aesthetically boring or unattractive when used in advertising. Visualead allows companies to insert their logos or graphics into the codes for branding purposes.
“Chinese consumers are definitely more used to scanning QR codes than any other consumers around the world,” Visualead Chief Executive Nevo Alva said in a phone interview. Mr. Alva said one reason QR codes spread quickly in China was that it allowed users to search for social networking accounts more quickly than if they had to manually type in Chinese characters.
Mr. Alva said Visualead saw the potential for expansion in China after it won a startup competition there. Shortly after that, Mr. Alva and another of the company’s founders relocated to Shanghai and opened an office there, he said. “We started to take China seriously and we actually understood that if you want to succeed in China you have to be in China.”
The partnership allows Visualead to work with Alibaba’s Mashangtao service, which provides sellers on Alibaba’s Taobao and Tmall online shopping platforms with codes that can be scanned by consumers for promotions or other marketing purposes. Merchants can use the service to generate codes for users to track packages or read product information.
The investment is the latest in a string of investments by Chinese firms in Israeli technology companies and venture funds that invest in them,
which has accelerated in pace over the past two years. When it comes to tech,
Israeli companies are still much smaller than counterparts in Silicon Valley, and Chinese companies have kept their investments to a few million dollars apiece, sometimes alongside non-Chinese venture-fund partners.