Israel Innovation 2.0

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During the past week, announced that it was acquired by Summit Partners for $127 million in cash and will be going private. Israel’s Cabinet approved an emergency plan to increase desalinated water production and Geekmedia revealed the creation of an Israeli startup incubation business modeled after Y Combinator. For these stories and more, see this week’s headlines below.

1. Italy’s Solergy Headed by Israeli From the Global Village
“Reared in California by Israeli parents, and married to an Italian wife, Yoav Banin speaks to his two young sons in Hebrew while raising them in Rome. This 38-year-old trilingual Silicon Valley veteran is co-founder and chief executive officer of Solergy, founded in 2007 to create and manufacture advanced concentrated photovoltaic (CPV) technology. Using optics to focus sunlight over 500 times onto special photovoltaic cells, CPV increases solar energy conversion efficiency while reducing the amount of expensive materials that often hamper the practicality of this field…”

2. Cabinet approves 420m cu.m. desalination plan
“The cabinet today approved an emergency plan to increase desalinated water production to 420 million cubic meters in 2013, in order to deal with the water crisis and ensure a reliable supply of water to the population, while protecting natural water sources. The production target is larger than the amount of water drawn annually from the Kinneret…”

3. Chinese money seeking Israeli technology
“Jay Young, who is currently visiting Israel, is a partner at a Chinese investment firm looking for business opportunities for High Net Worth Individuals…”

4. Q&A Site Acquired By AFCV Holdings For $127 Million In Cash
“Q&A platform has been acquired by AFCV Holdings, a portfolio company of Summit Partners, for $127 million in cash or $10.50 per share. AFCV will be delisting Answers, which was a public company, from the NASDAQ and taking the company private…”

5. Venturegeeks will incubate startups in Israel
“Geekmedia, the company that operates Israeli technology blog, is getting into the startup incubation business with a new program called Venturegeeks…”

6. Outbrain Buys Surphace From AOL
“Outbrain bought the content recommendation system Surphace from AOL for an undisclosed sum. Surphace is a reincarnation of Sphere, a startup founded by Martin Remy and Steve Nieker in 2006 as a related content plugin and was later acquired by AOL in April 2008 for a rumored sum of $25 million. In October 2009, AOL re-branded the service to Surphace and launched a self served solution for related content called S4. Since launch, the self served solution has attracted over 3,000 publishers and around 1 million page views a day…”

Information Technology
7. Rounds, Steroid Driven Video Chat, Anounces New Features
“The people at Rounds who sired the interactive video chat platform, have reason to be happy. Last August the company launched a Facebook application, that has grown to over 300,000 monthly users. The Rounds Facebook community has joined forces using the photo booth feature to take, no less than, 2 Million chat snapshots since then. Now Rounds have announced their plans for the coming months…”

8. Cabinet Approves National Plan to Reduce the Dependence on Oil in Transportation
“The Cabinet today (Sunday), 30.1.11, approved a national plan to develop technologies to reduce the global use of oil in transportation. The Government will invest approximately NIS 1.5 billion over the next decade and will work to raise billions of additional NIS from outside sources…”

9. GE and start-ups: Dancing with elephants
“GE Healthcare has three units responsible for seeking technologies outside the US: in Russia, Japan and Israel…”

In the first post of this series, I wrote about The Israel Conference which took place in LA last week and how its purpose was “to showcase Israeli excellence in technology and products and to expand business and investment opportunities between Israel and California.”

The conference had more than $20 billion in capital represented and brought together over 50 Israel-facing companies for a day full of presentations and advice from some of Israel’s most well-known investors (Jeff Pulver and Yossi Vardi) and most successful startups (i.e., Check Point, Tigo Energy,, etc.).


Bob Rosenschein is one of the most interesting websites coming out of Israel. It was founded by current CEO, Bob Rosenchein in 1999 as GuruNet and struggled as a desktop software company before its reincarnation as the Web-based answers service, in January 2005.

The site which used to dub itself an “encyclodictionalmanacapedia” started out licensing content from encyclopedias and dictionary companies, such as Barron’s, Miriam-Webster and Wikipedia among over 250 others. In November 2006, the company acquired the user-generated Q&A site, FAQ Farm and renamed it

WikiAnswers has since fueled’s current growth, which, in a recent interview I had with Bob Rosenschein, he attributes to a successful cycle of “Traffic. Questions. Answers”- traffic leads to questions being asked which leads to questions being answered on a continuous basis.



The increased traffic has led to become one of the top 20 fastest growing websites in 2009 and the site to become profitable.

“The biggest news of 2008 for us was that in the second half of 2008 turned profitable,” Rosenschein explains.’s profitability isn’t just from an increase in traffic though. As it has shown from its GuruNet days, it isn’t afraid to make changes and tweaks to anything. To increase profitability, the company changed its revenue model in 2008 moving from direct ads to display ads and performance ads, “the performance ads being the most profitable.”

Among the constant tweaks the company is making, we can expect to see in the next year “improvements in search, more functionality and internationalism.” The site will be made available in the languages of non-English countries that currently provide significant traffic to the site.

Rosenschein’s advice to startups is, “Be flexible. Roll with the punches, hold onto cash and be able to adapt. The most important thing is perseverance- don’t give up too quickly.”

Update June 15, 2009 Globes reported today that has raised an additional $7 million from Redpoint Ventures.

(Disclaimer: As part of a work experience program in the summer of 2006,  I interned at in Jerusalem for six weeks.)

Deloitte Israel Fast 50 Logo

Earlier today Deloitte Israel announced the 50 fastest growing technology companies in Israel based on percentage revenue growth over a five-year period. The 10 fastest growing companies overall were Pontis, Tufin Technologies, Kontera, Telmap, Safend, Algosec, Promisec, Imperva, cVidya, and SuperDimension.

Pontis, a telecom company that provides contextual marketing and selling, had a revenue growth rate of 5,500% while overall the Fast 50 companies had an average growth rate of 740%. 61% of the companies are in the software and Telecommunications/Networking sectors. Just as impressive as the 17 software companies listed, six Internet companies also made the list this year, making up 12% of the winners. The six is double last year’s amount (three) and triple the amount from the previous year (two).

The Internet companies on the list included Kontera,, PicScout, Babylon, IncrediMail, and MediaMind Technologies (formerly EyeBlaster). The average growth of the sector is 762%. Along with the recent purchases of Dapper (by Yahoo!), 5min (by AOL), and QuickSee (by Google), it definitely seems that Israel’s Internet sector has come of age.

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Facebook Logo When launched in the spring semester of my freshman year of college it immediately became all the rage on campus. It was a new way for us to keep in touch with friends from class, the dorms and various clubs and was great for organizing groups and sending messages related to classwork.

It was a closed system open to only a few universities and made us feel special to be part of its exclusiveness. Facebook had a clean design and few features and didn’t seem like a startup that had its sights set high.

Six-and-a-half years later, Facebook is a platform that is open to everyone, has over 500 million active users and is estimated to be worth over $24 billion.

The latest rumors are about when the company will go public, which will probably be in 2012, after the company has acquired more users and CEO and founder Mark Zuckerberg gains more experience.

While it is impressive that Zuckerberg, who is only 26, has been able to grow the company over the years, it is even more impressive that he was able to do so during its most critical early stages without having a business strategy.

Facebook’s success despite its lacking a strategy, along with the successes and failures of other startups, was part of a discussion that took place last night when 40-plus Israeli female entrepreneurs met to discuss how startups can avoid strategic mistakes in the early stages. The event was the latest one organized by Yazamiyot, a business networking forum for Israeli female entrepreneurs, and was led by Yair Snir, a lecturer at the joint MBA program of the Wharton School of Business and the Interdisciplinary Center (IDC).

Yazamiyot Female Entrepreneurs

Yazamiyot members discuss business strategy.

Snir went through the different steps that go into a good strategy (summed up as “Where do we want to get to and how do we want to get there”) and gave examples of successful companies ranging from McDonald’s to Lego. He concluded his presentation by stating that no strategy can guarantee success, to which a stunned participant asked if there’s any conclusive evidence out there for finding out what works.

The answer given last night was no, but one only has to look at Facebook to see that the answer should be yes. In a way. Although the business strategy lays out the long-term plans of a company it is not a one-time thing that you figure out and then lock away in some file cabinet never to return to. As with the rest of the business plan, it is dynamic and needs to be constantly updated based on changes in the industry and market trends. It is a guide to follow but not to the “T”.

To support this, when asked in an interview last year what advice he had for entrepreneurs, Bob Rosenschein, the founder and CEO of, responded that entrepreneurs should be flexible. By being flexible, Rosenschein has been able to keep afloat through the hard times and to grow it into the successful Top 20 website that it is today.

In the case of Facebook, by morphing over the years and staying attuned to what users want, it has been able to grow at a phenomenal rate.

Even though there is no way to guarantee success from the onset, by constantly doing research and being flexible, entrepreneurs can better ensure the success of their companies.

Yesterday Jeff Pulver’s second Tel Aviv 140conf took place. Conference speakers (“characters”) discussed how they’re using social media in real-time for different things from fashion and food to promoting Israel abroad. Speakers included Kfir Pravda, Yosi Taguri, Yoni Bloch and CEO Bob Rosenschein.

Special thanks to Niv Calderon and Roniet Berci who took these photos and let me use some for this video. Check out more of their photos from the conference on Facebook.


Itzik Cohen, Founder and CEO of ClipSync speaking at The Israel Conference in 2009. Image courtesy of The Israel Conference.

Yossi Vardi was recently interviewed about the upcoming second annual Israel Conference in LA that he is co-chairing. The conference will include speakers from Israeli companies in the cleantech, enterprise and mobile sectors among others.

Asked about what the business connection is between Israel and Southern California, he responded,

“I’ve come to visit Southern California and a number of startups, and always find I have to prolong my visit, because of the interest and very strong links. There’s lots of potential between the new media community in Los Angeles, the telecom industry in San Diego, all across this corridor between Los Angeles and San Diego, and Israel. There are 10’s and 10’s and 10’s of companies interested in Israel, mainly because new media and telecom, which are two of the major components of Israel’s high tech industry. Qualcomm has a huge development center in Israel, as do other companies. There’s a very high level of affinity.”

The goal of the one-day event is to take advantage of this by helping Israeli startups to expand business and investment opportunities between Israel and California. Over $10 billion of investable capital will be represented by some of the largest venture capital firms that invest in Israel, including Sequoia Capital, Shamrock Holdings and Giza Venture Capital.

Some facts about Israel and its ties to California include:

  • More than 3,000 start-ups have been launched in Israel, second only to the United States.
  • Significant Israeli companies have corporate offices in California with job creation in the hundreds of thousands worldwide.  A number of these are Fortune 500 companies such as Check Point, SanDisk, Magic Software, VocalTec Communications, AudioCodes, and Amdocs.
  • In 2009, foreign direct investment in Israel reached $3.8 billion.
  • Israeli high-tech capital raising in 2009 reached $1.12 billion across 447 Israeli high-tech companies, with 124 companies raising $275 million in the fourth quarter.  Sixty-seven companies attracted more than $1 million each.

Returning to the conference this year will be Bob Rosenschein, the CEO and Founder of, one of the twenty most-visited sites on the web.

Nine months ago there was talk and speculation that Israel’s Web sector was done and not likely to recover. Mainly expressed by TechCrunch editor-at-large Sarah Lacy after her visit to Israel in March, at the time she wrote about her disappointment with Israeli Web startups except for MyHeritage and a few others. Her piece caused an uproar among Israelis on Twitter and in the blogosphere, including on Israel Innovation 2.0.

At the time Lacy wasn’t completely off. It had been a while since an Israeli Web startup had a big exit or received a large investment or a lot of media attention. Combining this with the poor economy and the rise of Israel’s cleantech sector (which continues to grow), it seemed that Israeli innovation in the Web space had peaked when was purchased by eBay in 2005.

By September of this year though it became clear that 2009 was actually the resurrection of Israel’s Web industry and that Israeli entrepreneurs did not lose their mojo as Lacy had suggested they did. At TechCrunch50 in San Francisco Israeli startups Trollim, Red Beacon and AnyClip received the three top prizes for their promising technologies. A few weeks later in October, it was revealed that, perhaps the most memorable Israeli site to have survived the bust and to thrive, was the 13th most visited Website in September.

In addition to these sites, the second half of 2009 saw the rise of another part of Israel’s Web industry, Facebook and mobile applications. In November the Facebook facial-recognition application went live and in December the community-generated traffic tracking mobile application Waze started to make headway in the U.S. market, among other regions.

While most of these companies still need to prove themselves (with growth, revenue and exits…) it is clear that there is a new drive among Israeli Web entrepreneurs and Israel’s Web industry is reemerging. 2010 will be an interesting year to see what happens to these startups and if the newfound mojo will reverse the investment decline of recent years in the sector.

Editor’s note: This was originally posted on

During the week of June 7, 2009, research showed that the recession has impacted VC plans, which was long suspected and that cleantech investments faired the best of the different sectors. It was revealed that Intel’s recent acquisition of Wind River Systems includes an R&D center in Israel while the investment and Israeli startup series on Israel Innovation 2.0 continued with a closer look at For these stories and more, check below for this week’s 10 Israel-related headlines.

1. Giving New Meaning to ‘Electric Avenue’

2. Flower Power: World’s First Hybrid Solar-Gas Turbine Turning on Soon

3. Deloitte survey shows recession hit on VC plans

4. All that glitters / Nothing ventured, nothing lost

5. Israeli startups during the economic crisis:

Information Technology
6. Intel acquisition has Israel center

7. Peer39 Digs Deep With Semantics

8. The ‘Final’ Frontier of Algorithmic Trading

9. Nike to Introduce Shoe Recycling Program in Israel

10. Madonna announces second concert in Israel this summer

Despite the economic downturn, Israel’s startup scene is as strong and vibrant as ever. Just as the innovation hasn’t stopped, neither has the need for outside funding to develop these exciting technologies. Several conferences and forums have been organized in the past few weeks to maximize the access of Israeli startups to the funding they need. One that hasn’t happened yet, but will on June 4th in LA, is the The Israel Conference.

Considered the first of its kind, The Israel Conference will have more than $20 billion in capital represented when it brings together over 50 Israel-facing companies to showcase Israeli excellence in technology and products and to expand business and investment opportunities between Israel and California. 

Presenters and panelists include Yossi Vardi (“the Father of Israeli Hi-Tech”), Erel Margalit (founder of Jerusalem Venture Partners, a venture capital fund) and Jeff Pulver (social media guru and VoIP pioneer) . The presentations will cover a wide range of topics from a look at VCs and the CEOs they back (why they were funded and the results today) to green tehcnology (how innovation in that field is helping the earth and changing our lives) and sales opportunities in a slow economy (where the money is, what the current market is like and how Israeli companies are maintaining a competitive edge). 

Some of Israel’s overall edge and Caifrornia’s role in it can be attributed to the following:

  • Israel has over 8,000 patents from a population of just 7 million. 
  • Within the past 15 years, major companies have risen that were developed in Israel and have their corporate office in California with job creation in the hundreds of thousands, world-wide. A number of these are Fortune 500 today with corporate offices in California such as Check Point, Zoran, and Amdocs.
  • Israel has the largest number of scientists in the world per capita at 145/10,000 compared to the US with 85/10,000.
  • In 2008, over $2B in capital was invested over 480 Israeli high-tech companies, an increase of 18% over prior year with 50% coming from funds outside of Israel, mostly from the US.
  • Over the past 3 years, Israeli firms raised $2.3Billion in IPOs on exchanges around the world while over $18B was spent on acquisitions of Israeli High Tech companies.

The conference will also feature a presentation by Bob Rosenschein, the CEO and Founder of, one of the Top 20 fastest growing Websites. I recently had the chance to interview  Rosenschein and will post about that next in this series.

The U.S. dollar is falling, several foreign countries are experiencing significant growth rates, and the price of gold has risen from the $300 range to the $800 range. What should expatriates living in Israel invest their U.S. dollars in?

These questions and more were discussed at the first Jerusalem Investing Meetup event organized by portfolio manager extraordinaire, Zack Miller. Topics covered in depth included:

– Why investors invest internationally? Growth, valuation, diversification.

– How investors can invest internationally? Stocks, International bonds, currencies.

By applying what I have learned over the past few months about investing and technology in Israel with what was discussed at the meetup, here are my thoughts on investing in Israel and its high-tech companies:

While BRIC countries (Brazil, Russia, India and China) have had the most growth in the past few years and promise the most return. Return on investments in these countries aren’t a guaranteed thing. Israel, on the other hand, also has a fair growth rate and a proven track record of getting money out of investments made in it. For reasons such as these, VCs are learning to love investing in Israeli companies and so should more individual investors.

To briefly expound, Israel is currently a bull market that has the highest concentration of engineers in the world and over 120 publicly traded companies in the US. After the United States, Israel has the largest amount of companies listed on the Nasdaq and is one of the top four countries American VCs invest in. Many companies, from Microsoft to Cisco to Google, have opened R&D offices in Israel. There is also talk that Google is planning to hire more local database experts as the demand for that increases.

If so many major companies find value in investing in Israeli technology, shouldn’t the individual investor as well?

Here are some well-established Israeli high-tech companies that are being recommended to individual investors, such as the expats at the meetup:

Comverse Technologies
Teva Pharmaceutical
Elbit Medical

I think these companies should also be recommended:
Given Imaging
Ormat Technologies

Think other Israeli high-tech companies should be recommended to investors? Enter the company or companies you recommend and I’ll add it here.