March 2017 - Monthly Insights - Israeli Venture Capital
Updated: Aug 15, 2018
INTEL ACQUIRES MOBILEYE FOR $15.3 BILLION - THE BIGGEST 'EXIT' EVER IN ISRAELI HIGH-TECH
Intel, a multinational technology giant, acquired Mobileye, a developer of autonomous vehicle technology for $15.3 billion The acquisition of Mobileye, which is the biggest acquisition ever of an Israeli high-tech company, signifies Intel's intention to join the autonomous vehicle race, headed by multinational technology giants and front-line car manufacturers. Intel’s decision to acquire Mobileye is set to provide strong tail wind to Israel's quickly growing mobility industry, as Mobileye is set to head Intel's development efforts on its autonomous vehicle from Israel.
Mobileye, which pioneered computer vision based systems for driver assistance technology and accident prevention, has previously raised over $800 million in its IPO on NASDAQ in August 2014 and, prior to the announcement of the acquisition, had a market cap of about $10.5 Billion.
Intel CEO Brian Krzanich noted, “Intel provides critical foundational technologies for autonomous driving including plotting the car’s path and making real-time driving decisions. Mobileye brings the industry’s best automotive-grade computer vision and strong momentum with automakers and suppliers. Together, we can accelerate the future of autonomous driving with improved performance in a cloud-to-car solution at a lower cost for automakers.”
The acquisition of Mobileye is truly historic as it represents the largest ‘exit’ in the history of Israel’s High-Tech industry. The monumental ‘exit’ reaffirms Israel’s title of Startup Nation, and attests to the high caliber of Israeli startups and their superior technology.
INVESTMENTS IN ISRAELI STARTUPS REMAIN STRONG AMID ATTRACTIVE TECHNOLOGY AT LOWER VALUATIONS
Following record breaking fundraising in 2016 ($4.8 billion), Israeli startups have continued to show strong fundraising in 2017 with approximately $800 million raised so far this year.
The strength of the Israeli venture capital market stands in striking contrast to the downturn currently witnessed in the U.S. venture capital market, as in Q4/2016 there was a 17% decline in total fundraising by U.S. startups quarter over quarter.
We find that this continued momentum is driven by the discounted valuations attributed to Israeli startups vs. their U.S. counterparts and their ability to generate global-leading technology, most recently affirmed by Intel’s acquisition of Mobileye for $15bn. Data suggests that the median pre-money valuation of early stage Israeli venture-backed companies is 54% lower than that of their U.S. peers, driving strong returns for investors at ‘exits’.
INTEREST GROWS IN ISRAELI SMART MOBILITY
As we progress through Q1/2017, we continue to see strong interest from multinational players in Israeli technology, and more recently in the quickly growing smart mobility sector. Honda is continuing its pursuit of Israeli technology through its Xcelerator program and recently announced a new partnership with DRIVE,
a Tel-Aviv based innovation hub focused specifically on smart mobility technology
SNAP INC. GOES PUBLIC
Snap Inc., the parent company of Snapchat, was the first major tech initial public offering of 2017. Although many investors had doubted Snap’s ability to successfully IPO due to its high valuation and low user base engagement relative to other social platforms, its share price soared 44% in the first day of trading. While the verdict is still out on Snap’s ability to maintain its strong trading debut, we find this to be a positive sign and expect this to trigger an IPO domino effect with multiple late stage companies waiting in the docks to test the public markets.
NOTABLE INVESTMENT ROUNDS
VAT Box, a Viola Private Equity portfolio company, secured funding for $20 million, and has accumulated $44 million in financing to date. VAT Box is a cloud-based software for automated VAT returns and compliance.
Feedvisor, a JAL Ventures portfolio company, secured financing for $20 million from U.S. Venture Capital Fund General Catalyst, and has accumulated $32.7 million in financing to date. Feedvisor is a platform that provides algorithmic pricing and revenue intelligence solutions for E-commerce companies.
Samanage, a Carmel Ventures and Gemini Israel Ventures portfolio company, secured its series C funding for $20 million, and has accumulated $44 million in financing to date. Samanage develops IT service management software (for handling IT incidents, service requests, problems and changes).
Palo Alto Networks, a network and enterprise security company, acquired LightCyber for $130 million. LightCyber develops cybersecurity solutions based on automated behavioral attack detection. LightCyber had raised $32 million prior to its acquisition. LightCyber was a Glilot Capital Partners portfolio company, and is the 5th exit out of 8 portfolio companies from their first Fund.
Kalytera, a Canadian Cannabidiol (CBD) therapeutics company, announced its intention to acquire Talent Biotechs for $30 million. Talent Biotechs is an Israeli developer of Cannabidiol based therapies with a lead program in Graft versus Host Disease (GvHD); a major cause of mortality after stem cell transplantation, currently in FDA phase 2 clinical trials.
NOTABLE FUND FORMATIONS
Firstime held the first close of its second venture fund, Firstime II at $40 million (with a targeted cap of $60 million). The fund invests in early and late stage startups focused on new media and digital businesses with internet as their main platform for operation and distribution.
RECOMMENDED VENTURE CAPITAL READS
Tel Aviv University in top ten list for most billion-dollar startup founders [NoCamels]
Foreign investors scouting for Israeli smart mobility technology [Globes] Israel and World Bank to increase joint work in Africa focused on cybersecurity, water and agriculture [Times of Israel] Venture Capital Fund – First to raise capital by Issuing own digital tokens [Bloomberg] Waymo (Google self-driving project) alleges Uber stole key parts of their self–driving tech [Waymo]