Israel Innovation 2.0

Though 2008 was clearly a tough year for companies and venture capital funds in Israel and worldwide, several announcements this week have given a better picture of the extent of its impact on Israel’s Silicon Wadi.

Globes reported this past week that Aviv Venture Capital raised $52 million for its Aviv II Fund last month but had originally set out to raise $100 million. It was also announced that social search technology startup, Delver, will be ceasing its operations in the next 30 days unless it raises necessary funds or gets sold.

In addition to these, research on venture capital funding in the fourth quarter of 2008 from the Israel Venture Capital Research Center shows how the global recession affected fundraising in Israel overall. According to a Jerusalem Post article on the research, in the fourth quarter, 109 Israeli hi-tech companies raised $394m. which was 34% below the $600m. raised in the previous quarter and 22% below the $503m. raised in the fourth quarter of 2007.

It’s not just on the funding side. Nortel’s recent bankruptcy filing has raised questions about what toll it will have on Israeli companies that were financially intertwined with it through business contracts and partnerships. Israeli companies expected to take a hit include AudioCodes and TTI and possibly Radvision and Alveron.

Things might continue to be gloomy and hard in 2009, but it won’t be the end of innovation and entrepreneurship in Israel. The layoffs that have been a result of the economic crisis are producing a new crop of entrepreneurs and startups that will have better skills to succeed in the long term using less money should they survive the downturn.

SAManage, a provider of on-demand (SaaS) IT Management services with an R&D office in Israel, announced today that it has secured an undisclosed amount of Series A Funding from Xenia Venture Capital and existing investors to help support its growth and development of new SaaS-based services.

The company, which was was founded in 2007 by Doron Gordon, offers solutions for IT Asset Management, IT Risks Management, License Management and more. In September 2008, SAManage made its IT Contract Management software available for Salesforce.com users as a free AppExchange application. The software enables users to manage the organization and tracking of IT contracts, software licenses and subscriptions. 

SaaS Industry outlook

According to an InformationWeek article by Andrew Conry-Murray in November 2008, a Forrester Research report released at the time predicts that while SaaS-based IT management currently accounts for 1% of IT management software, it is expected to grow to 10% of the market by 2013 because it offers cheaper and faster deployments. The report also predicts that enterprises with 1,000 or more employees will account for 50% of SaaS installations in 2009 and that while the Big Four (BMC, IBM, HP and CA) are active in the cloud, “complex applications can’t quickly be retooled for SaaS, giving upstarts time to secure enough customers to flourish.”

Additional SaaS Information

• An Aberdeen Group survey of over 130 enterprises found that top companies are implementing SaaS successfully and “view their use or planned migration to SaaS as a long-term solution.”
• Research from Gartner analyst Michael Maoz predicts that by the year 2012, 30 percent of investments in CRM will be via software-as-a-service (SaaS). (via Lauren McKay of DestinationCRM.com) 
• Interest in SaaS has lead to several acquisitions by vendors, including Cisco’s acquisition of WebEx, Dell’s purchase of MessageOne and Google’s purchase of Postini among others.
• Other Israeli SaaS companies include: Clarizen, G.ho.st, Magic Software, PNMsoft, Confidela and Nolio Ltd. 

Israel-based ClickSoftware Technologies, a mobile workforce management and service optimization solutions provider, recently announced its new solution for customer interaction management and the addition of it to the ClickSoftware’s ServiceOptimization Suite. 

The new solution, ClickContact, automates the process of customers scheduling and maintaining appointments over the Internet in a way that gives them more control and flexibility while reducing the staff costs and responsibilities of the company. It also enables customers to provide feedback in an organized manner in which a company can act on. 

According to ClickSoftware website, ClickContact features include:

• Integrated with ClickSchedule to maintain consistent service policy
• May be deployed on-premises or as a hosted solution
• Enables integration into corporate web site
• Online appointment scheduling, updating and/or canceling
• Automatic notifications, including appointment confirmation, reminders and real-time updates, available via text message, voicemail or email
• Customer satisfaction surveys available immediately following service visit
• Look & feel, notification defaults, notification templates and customer survey all fully configurable to meet customer needs

Other solutions making up the ServiceOptimization Suite include ClickMobile, ClickSchedule and ClickLocation. 

ClickSoftware solutions are currently being used in industries such as Insurance, Telecommunications, Utilities and Home Services. 

Company Facts

Founded in 1997.

Moshe BenBassat, Chairman and CEO.

Hannan Carmeli, Chief Operating Officer.

Products: ClickSchedule, ClickContact and ClickMobile.

Website: www.clicksoftware.com

During the week of January 11, 2009, the war in Gaza escalated and news about Israeli tech companies continued. The biggest news of the week was that multi-touch technology company, N-Trig raised $24 million in its latest round of funding, the majority coming from Microsoft. Better Place announced its partnership to bring electric cars to Canada while Aladdin agreed to be acquired after months of talks with Vector Capital. Other information security companies, Trusteer and Commtouch also made headlines with important security threat findings. For links to these stories and more, check out the complete 12 Israel-related headlines from the week of January 11, 2009 below. 

Cleantech

1. Better Place Partners with Ontario to Bring ‘Car 2.0’ Electric Car Infrastructure to Canada

2. Eilat to host major international energy conference

Investments and M&A

3. Information security provider Aladdin is to be acquired by Vector Capital for $160 million

4. Microsoft leads $24m round for touch screen co N-trig

Information Technology

5. Phishing attack uses pop-up message on bank sites

6. Shunra Software Joins Microsoft Visual Studio Industry Partners Program 

7. IDV Solutions and Eternix Announce Technology Integration for Innovative Geospatial Solutions for the Defense & Intelligence Industry

8. RiT Technologies launches Paladin environment and security management suite

9. User Generated Content Sites Breeding Ground for New Internet Security Threats Says Commtouch Trend Report 

N-Trig

10. N-trig Secures $24 Million of New Funding to Fuel Hands-on computing™ Growth in Global PC Market

11. Microsoft Betting Big on ‘Touch’

12. CyberLink and N-Trig Introduce Next-Generation Multi-Touch Enabled Applications at CES

The breaking news that Steve Jobs of Apple  is taking a medical leave of absence for several months makes the news from earlier this week of Microsoft investing in Israel- and Texas-based N-Trig gets even more interesting.

Earlier this week, N-Trig, the sole provider of DuoSense™ technology which combines pen, touch and multi-touch into one device, announced  it successfully raised $24 million in its latest round of funding for the purpose of funding ongoing strategic partnerships with original equipment manufacturers (OEMs) to develop multi-touch notebooks that will reach a wider market.

Investors in the round included Canaan Partners, Evergreen Venture Partners, Aurum Ventures and Challenger Ltd. In addition to these venture capital firms, none other than Microsoft Corp. also invested. The investment comes as part of its efforts to build more pen and touch applications into its next-generation Windows 7 operating system and as part of its racing Apple to multi-touch. 

To date, N-Trig’s DuoSense Technology is already used in Dell’s Latitude XT and Hewlett-Packard’s TouchSmart x2 and the company announced last week with CyberLink Corporation that they are developing multi-touch-enabled solutions for PCs worldwide together to increase that amount. Though it’s unlikely, it will be interesting if Apple’s plans will be in any way hindered while Jobs is away.

N-Trig was founded by Dr. Meir Morag in 1999 after he previously co-founded e-Sim. The company is lead by CEO Amihai Ben-David and has raised some raised some $73 million while growing to over 100 employees over the years. Last year, “Globes” rated N-trig as one of Israel’s most promising start-up companies.

How does multitouch technology work? Lenny Engelhardt, VP of Business Development at N-Trig explains in this video: 

Prof. Yuval Shavitt

Not happy with the prediction software of TiVo, Google Trends or DialIdol.com? According to the website of a Fox News affiliate, Israeli researchers from Tel Aviv University (TAU) have developed software that

“uses a mathematical formula to sort music requests logged by the Gnutella peer-to-peer file-sharing network to predict the next pop star.”

The researchers came up with the geographical formula – which has had a 30-50% rate of success so far – after realizing that

“those artists who eventually made it big on the national level first had a huge number of user queries in their local region, even when they had zero queries from elsewhere in the United States.” 

Record companies can find this software useful as an added measure to determine which new signings, half of whom fail, will have the most potential. Companies in other fields can apply the formula to other entertainment areas including television programs and video and animation clips – including YouTube, Metacafe, AniBoom and other similar sites.

This software was developed by Professor Yuval Shavitt and a student of his as part of the DIMES project which aims “to study the structure and topology of the Internet.”

During the week of of January 4, 2008, aside from the escalation of Israel’s operation in Gaza and more attacks on Israeli websites, one of the biggest stories in the tech world was the launch of Israel-based Ctera’s new storage device. Another was that Israel issued its first solar licenses for solar power plants. Despite the poor economic and VC investment outlooks, at least three Israeli companies (including Ctera) announced they raised funds. There was also news of an imminent Aladdin sale that sent its stocks rocketing. For these stories and more, you can view this week’s 15 Israel-related headlines below.

Israel-Hamas Conflict (Technology side)

1. Israel-Gaza Conflict Spills Over Into Twitter

2. Hackers Take the Fight Over Gaza Online

3. Digital World: How to beat anti-Israel hackers at their own game

4. Spam poses as CNN story about Israel-Hamas conflict

Cleantech

5. Israel issues first solar licenses

6. Cleantech Investment Slowdown Predicted in 2009

Investments

7. SundaySky Secures First Institutional Round of $8 million from Carmel Ventures and Globespan Capital Partners

8. TraderTools Raises $7.5 Million

Information Technology

9. Aladdin shares surge on report company sale is near

10. Start-up Ctera will offer cloud storage through carriers

11. Save Mart Supermarkets Deploys Integrated Retalix Supply Chain Software

12. Gigya: December 23rd Was Biggest Day For Our Widgets, Ever

Miscellaneous

13. Freeverse Announces Slot Car Racing Game for IPhone

14. Eyes in the sky

15. Fish memories underestimated

Top posts on Israel Innovation 2.0 from the past week

G.ho.st: A real model for coexistence

Why TechAviv and technology in general lacks women (Part 1)

Welcome to the first installment of a new video series on the Israel Innovation 2.0 blog titled, “What is…?” Each video in the series will provide a brief explanation of a new technology from an Israeli startup. Leading off the series is Ctera Networks Ltd., which launched a new device at the Consumer Electronics Show (CES) in Las Vegas week to a lot of media coverage. Its technology has potential to is going to change online storage as we know it.

To visualize how simple the process is, here is a diagram from Ctera’s website of how CloudPlug works.

Ctera was founded by serial entrepreneurs, Liran Eshel and Zohar Kaufman in May 2008 as a storage solutions provider for home and small-business back up. The company combines Network Attached Storage devices with cloud storage services to create its Cloud Attached Storage™ technology.

Ctera Networks Ltd is based in Petach Tikva, Israel and CloudPlug should be available sometime in 2009.

Earlier this week Daniel Cohen of Gemini Israel Funds posted on his blog his predictions for Israel’s tech community in 2009. Topics he made predictions for included cleantech, Google making acquitisions, Web 2.0 companies being acquired and that “there is a world beyond Atlanta/Southeast, New York and Silicon Valley, specifically in Asia.” 

Asia might gain ground in 2009 in terms of, according to him, “companies starting in Israel and marketing to Asia directly without having anything to do with the US market,” but Atlanta/Southeast, New York, and most parts of California (particularly San Diego) will still continue to thrive. My prediction is that Silicon Valley, in specific, will probably lose ground.

Regarding the Atlanta/Southeast region, towards the end of 2008, the AICC-Southeast region created a blog for posting the latest news related to any of its companies and partnerships. To get an idea of what can be expected this year in that region and why it will still thrive, here are titles of some blog entries about Israeli companies and the Southeast region from the end of November to the end of December 2008:  

• AICC Member TopEyeView Demos at Madonna Concert - December 30, 2008
• AICC Members Work Together: SGR Advises Given Imaging in Acquisition of Medtronic’s Bravo – December 28, 2008
• AICC Member Scopus Video Networks Acquired by Harmonic for $86 million – December 23, 2008
• AICC Member BlogTV Wins YouTube Stars to Make a Web TV Network – December 10, 2008
• AICC Mission to Israel in Atlanta Business Chronicle – December 6, 2008
• AICC Member PerSay Raises $2.4 Million – November 27, 2008
• MobiMate and WorldMate Establish New Headquarters in Atlanta – November 27, 2008

What do you think? Will the Atlanta Chamber of Commerce continue to help Israel thrive, stay neutral or lose ground in 2009?

I meant to write about WorkLight last month but got caught up with things. As what happens every few weeks though, my attention has quickly been drawn back to the company again. In Jon Brodkin’s post on Network World earlier today, he listed the “Secure Web 2.0 for Business” Enterprise 2.0 company as one of 10 startups to watch in 2009. I couldn’t agree more.

WorkLight, Inc. seemed to have a stellar year in 2008, and as Web 2.0 in the enterprise continues to grow  in 2009 despite the economic downturn, there’s no reason not to think that it won’t repeat it, and more. Since the company first showed up on my radar as one of two Israeli demonstrators at the 2007 DemoGermany conference in Munich, the company has raised an impressive round of funding, been chosen as one of the top 10 web startups in Israel’s version of the TechCrunch and Demo conferences and just last month, and partnered with NetVibes to develop secure widgets for the enterprise among other news about the company.

The company’s software is customized for specific industries and, as such, has helped simplify and accelerate the embracing and integration of Web 2.0 in the enterprise. On its website, the company explains itself and its offerings as follows: 

“WorkLight® Inc. develops server software products that help businesses reach customers, channels, employees, and partners securely in the places they frequent online, such as iGoogle, Windows Live, desktop widgets, RSS readers, Facebook, even the Apple iPhone. Through WorkLight, people effortlessly get valuable information they desire, such as account status, product availability, or updates about their latest transactions. They can then take actions, for example order products or services, respond to promotions or offers, and consult with colleagues, without having to log into a portal or corporate web site. As such, WorkLight transforms consumer interfaces into enterprise-grade business tools that directly increase revenue.”

Here is an image from the site of how its products work.

Additionally, I’ve created a timeline of some of the WorkLight news that caught my attention in 2008

Company Facts

Founded in 2006.

Based in New York and Yakum, Israel.

Shahar Kaminitz, CEO and Co-Founder.

Doron Somer, Vice President of R&D.

Products: WorkBook, WorkLight for SAP, WorkLight for Technology Companies and WorkLight for Business Services.

Competitors include: Awareness Inc. and NewsGator Technologies Inc.

Customer industries: financial services, retail banking, manufacturing, book publishing, technology and IT services and utilities

Website: myworklight.com