June 2020 - Monthly Insights Israeli Venture Capital
News and Updates
THE INTEL - ISRAEL LINK On the back of Intel’s latest acquisition of Moovit for $900 million and the acquisition of HabanaLabs in late 2019 for $2 billion, we decided to feature Intel’s recent activities in the market and their continued impact on the local ecosystem. Intel started its Israeli operations in 1974, as Dov Frohman, an Israeli engineer, established Intel’s first development center outside the US. Since then, the Israeli center has grown from a small team of five researchers to over 13,000 today across five centers, being considered the largest private employer in Israel and having invested over $35 billion in the country during its decades of activities. Intel’s impact also transcends across many other players in the market, through its significant procurement of products and services from local suppliers and through exports of around $3.6 billion in 2018, representing 7.5% of total hi-tech exports in Israel. Today, Israel is one of the most important development and manufacturing centers for Intel, in charge of some of Intel’s most advanced and innovative technologies, including artificial intelligence (AI) solutions, communication, autonomous vehicles and cybersecurity solutions. In fact, the Haifa-based development center designed and launched Intel’s most recent generation of processors to date and has developed Intel’s first-ever AI Chip. When developing these types of technologies, Intel has not only been reliant on internal R&D, but has also expanded to collaborate with other local startups through investments and acquisitions. Most recently, in the chip for AI space, Intel invested in NeuroBlade and acquired Habana Labs, for a staggering US$2 billion.
Habana Labs Chairman Avigdor Willenz
The acquisition of Habana Labs in particular, is seen as a strong move by Intel to strengthen its AI portfolio and accelerates its efforts in the nascent, fast-growing AI silicon market, which is projected to stand at $25 billion by 2024. The announcement also highlights the on-going battle between Intel and Nvidia over the control of this new market segment. Nvidia, which announced the acquisition of Israel’s Mellanox Technologies earlier in 2019 was said to have a competing bid with Intel for the acquisition. The acquisition of Habana Labs for such a high price tag clearly highlights the importance of the segment for Intel’s future development and we expected that this will continue to solidify Israel’s presence as a leading chip development center, both for Intel and for the other global players. While Intel is perhaps best known for its chip manufacturing activities, Intel it has continued to expand its offering to additional markets. The emergence of the autonomous vehicle has been a prime target for Intel over the past few years. In 2017, Intel signaled to the world that it’s prepared to make considerable investments in the emerging space and marked Israel as the prime source of these efforts on the back of the acquisition of Mobileye, the Jerusalem-based developer of Advanced Driver Assistance Systems (ADAS) for $15.3 billion (the biggest Israeli exit to date). While Mobileye is set to offer Intel a strong foothold in the computer vision for autonomous vehicle space, Intel recently decided to double down on Israeli technology related to the future of mobility by acquiring Israeli mobility-as-a-service (MaaS) company, Moovit, for $900 million. While Mobilieye will be able to develop the vehicle infrastructure of the future, Moovit provides Intel with the vehicle platform of the future. This acquisition will allow Intel to leverage the data which Moovit currently holds on the global transportation patterns to fulfill its plan of becoming a full-scale mobility as a service provider.
Overall, it is clear that Intel has propelled Israel into its center stage of its global expansion efforts. However, and perhaps most importantly, Intel also understands the importance of gaining early access to Israeli technologies that could benefit their core activities. As part of this, Intel has established a venture capital arm which has invested over $500 million across 90 Israeli companies since it started its venture operation. In 2019, Intel decided to expand their Israeli team after realizing the impact Israeli entrepreneurs and innovation have over domains which are part of their core activities including AI, data centers, autonomous vehicles, 5G, and cybersecurity. Given the strong foundation that Intel has laid in Israel since 1974 and it’s continued investment in the country, we believe that Intel will continue to play a pivotal role in the ecosystem for many years to come. This role is important for many reasons, as Intel both invests, develops, trains and acquires companies in the local ecosystem.
Notable Investment Rounds
Granulate, a TLV Partners portfolio company, secured its series A round of $12 million led by Insight Partners with the participation of TLV Partners and Hetz Ventures. Granulate is an AI-powered optimization layer designed to significantly improve performance by creating a streamlined environment for any app.
Lawgeex, an Aleph VC portfolio company, secured its series C funding of $20 million led by Corner Ventures with the participation of Aleph VC, Lool Ventures and La Maison. LawGeex is an AI-powered contract review platform that enables businesses to automatically review and approve contracts.
Axonius, an Emerge VC portfolio company, secured its series C funding of $58 million led by Lightspeed Venture Partners with the participation of YL Ventures, Bessemer Venture Partners, Vertex Ventures and Emerge. Axonius is a cyber-security asset management platform that lets IT and security teams manage and secure devices.
Hellman & Friedman, the American private equity firm, acquired Checkmarx for $1.15 billion, a Salesforce Ventures portfolio company that provides application security solutions.
Intel (NASDAQ: INTC), the American multinational technology company, acquired Moovit for $1 billion, a Gemini portfolio company that provides a free local transit planner, featuring live arrival & departure times, updated line schedules, local station maps, and service alerts.
National Instruments (NASDAQ: NATI), the American multinational technology company, acquired Optimal+ for $365 million, a Viola Ventures portfolio company that develops lifecycle analytics solutions for the automotive, semiconductor, and electronics industries, serving tier-1 suppliers and OEMs..
Recommended Venture Capital Reads
A Look at SoftBank Vision Fund I [7 Global Capital] Three years ago, Ryan Cohen sold Chewy.com for $3.35 billion. He promptly proceeded to plow nearly his entire new fortune into just two stocks. [Bloomberg] Which tech giant will dominate your work computer? Microsoft is taking no prisoners in its battle for market share with names such as Slack and Zoom. [The Wall Street Journal] From an economic perspective, millennials might be the unluckiest generation in American history. [The Washington Post]