Read It On VC Cafe First: Six Israeli Startup News That You Probably Missed This Week

It's earnings season and it's hard to keep up with all that's been going on with Israeli companies this week. Want to catch up with the latest news? Below is a bite-size summary of the latest VC and start up news from the holy land.

1. eSnips, an Israel-based "social content-sharing site" released 'Social DNA'. Social DNA is a series of quick 'tests' that allow users to find like minded people. The concept is not new as it is implemented by many dating sites and Facebook Apps such as: compare people , similar friends and many online dating sites. eSnips' CEO Yael Elish reported to have approximately 13 million monthly users, out of which 200K are Israelis [Sources: Techcrunch, The Marker]
   
   
2. New VC Fund focused on India-Israel investments. Footrpint’s focus is to invest $2-4 million in lifestyle, retail, financial services, security, education, clean technology and life sciences companies in the India-Israel-India corridor. Footprint is led by Neill Brownstein, co-founder of Bessemer Venture Partners, as well as Linda Brownstein, Josh Bornstein and Shalini Elassery. Footprint already signed an agreement in July 2006 with Infinity—an Israeli-Chinese technology fund with $350 million in its current fund—to invest in Israeli companies and technologies that target Indian markets. [via LiveMint and VC Circle]
   
   
3. Electric Cars in Israel? Following Shai Agassi's and Idan Ofer's "Project Better Place", Israel is attracting foreign investments related to electric cars. French car maker Renault SA is studying a possible plan to build a manufacturing plant for electric cars in Israel. [via Businessweek]
   
   
4. JaJah loves Jangl - Israeli VOIP Platform JaJah recently announced a series of new deals. It started with an ad for minutes campaign, enabled by a partnership with Oridian (also Israeli). The geographically targeted ads allow JaJah to monetize while providing a free service to its users. Now, JaJah announced a partnership with Jangl, a VOIP platform that enables users to get a virtual telephone number on the web. Jangl will help JaJah to extend its reach to Jangl's 40M users and Jangl will in turn use JaJah's monetization platform and gain entry to the 122 countries in which JaJah is active. [via Mashable]
   
   
5. Video discovery made simple - Israel based Taboola wants to enable content discovery style 'Stumble Upon' for video sites. EverGreen believes in the idea - it will finance a round of $1.5M to make it happen. Taboola allows users to integrate ads onto a site's video player using java script tags. Israeli 5min.com has been testing the service and it reported a 23% increase in watched videos and 53% increase in session length since it started the test. [via NewTeeVee]
   

See an example of Taboola (click on related, bottom left):

• Ukraine planning to create free trade zone with Israel. Among the priorities of Ukraine's development the president identified the development of industry, specifically machine building, space- and aircraft construction, and chemical industry. [via]

Daylight Savings: XJet first round, Octavian second round, Petrobras Shopping, Jordan Valley Semiconductors and Q3 Summary

Catching up with some of the recent deals in the industry. Below is a short recap of what's been getting money these days:

1. Octavian Inc, a leading provider of Separately Managed Account (SMA) solutions in the Wealth and Investment Management (WIM) industry, announced the completion of a $10 million, second round of investment led by Vertex Venture Capital, together with Carmel Ventures and Gemini Israel Funds, Octavian's existing investors. [via]
   
   
   
2. Solar energy start-up XJet raises $9m. In stealth mode, XJet aims to redefine solar cells cost efficiency by using next generation deposition technologies. Following Shai Agassi's "Project Better Place", this investment strengthens Israel's position as a world leader in the export of renewable technology. [via]
   
   
3. Staying on energy, Globes reports that Brazilian energy giant Petroleo Brasileiro SA (Petrobras), the fifth largest oil refiner in the world, is examining Israeli cleantech for possible investment at the International Water Technologies and Environmental Control Exhibition and Conference - Watec 2007 in Tel Aviv.The sources added that the company will invest $112 billion in technology companies worldwide under its five-year plan. The bulk of this investment will go to renewable energy technologies, including $15 billion for biofuel. [via]
   
   
4. Intel invests $11M in Jordan Valley Semiconductors. The 12-year-old Jordan Valley develops tools for semiconductor metrology based on x-ray technology, with offices in Israel, U.S., Europe, and Asia. Intel's investment follows a funding spree of $31M since May, including Israel-based application management software company Aternity and Israel-based portable computing environment company Ceedo and Israeli-founded IP Phone provider, JaJah. [via]
   
   
   
   
5. VC Investments in Israel in Q3 up 9% compared to equivalent period last year. In the third quarter of 2007, 108 Israeli high-tech companies raised $414 million from venture investors – both local and foreign. The average company financing round was $3.83 million in Q3, compared with $4.38 million in the third quarter of 2006. [via]
   
   

Quigo Brings Home the Bacon, 5min for $5M, TransChip Makes an Exit, Refresh 07

The man who reads nothing at all is better educated than the man who reads nothing but newspapers.

Thomas Jefferson (1743 - 1826)

1. AOL buys Quigo for $340M. Yaron Galai and Oded Itzhak (featured on VC Cafe in the past) are probably happy to be part of AOL's web advertising network. The deal adds about 100 employees to Time Warner's AOL, and follows a series of acquisitions in the ad space including: ad network Advertising.com; Tacoda, which targets users based on their habits; wireless ad network Third Screen Media; video ads company Lightningcast; and ADTECH, a global ad-serving company. Is more Israeli M&A to follow? [via AP]
   
   
2. Life VideoPedia 5min, a 'how to' video sharing site, (previously covered here) raised a $5M round from Spark Capital. This round follows a pretty major dilution for the founders, following 5min's initial angel round of $300K. Get a taste of the competition at Graspr.com. [via Techcrunch]
   
   
3. Samsung Electronics made their first acquisition in ten years - Samsung paid $70M for none other than TransChip Israel Ltd (Tanschip's old URL links to Samsung). Samsung spokeswoman Lee Eun-hee said TransChip would be renamed Samsung Semiconductor Israel R&D Center Ltd. and will become the Korean company’s 17th research and development centers around the world. [via IsraelPlug]
   
   
   
4. Refresh07 - IDC research has teamed up with Gemini Israel and Genesis Partners to throw the Refresh07, the 'new media' conference. It is taking place in Tel Aviv, Israel on November 21st. The conference will deal with the evolving business models online, their impact on distribution channels and traditional media and content value/ monetization. See the conference page and the Refresh07 Facebook group. [via Israel VC on SandHill Road]
   

Ask the VC: Q&A with Gemini Israel Funds

Sagi Rubin is an associate at Gemini Israel Funds. I came across Sagi's blog, "The Grass is Greener on Our Side", and asked him to answer a few questions for VC Cafe. I hope you find the Israeli VC perspective an interesting one. For more Gemini VC Blogs check out Talia Aben's and Daniel Cohen's blog or his excellent recent post on VentureBeat.

As background, Gemini was founded in 1993 and has about $550M under management in four funds. It invests in approximately 35 tech companies in Communications & Wireless, Consumer Electronics, Enterprise Software, Internet and Semiconductors.

Gemini invests primarily in Israeli companies and entrepreneurs and its active portfolio includes adap.tv, conteXtream, esnips, IXI mobile and more. Most recently, Gemini sold Triana, a seller of automated post-trade processing services to ICAP for $248M in cash + $9M in ICAP shares.


Question: What are you looking for in a prospective company?

We are looking for companies that can become global market leaders, with several hundreds of $M in revenues. This requires first and foremost, a world class management team and founders. In addition, a very large market opportunity, the ability to build a strong and sustainable competitive edge (many time technological), have a sound business model, and very importantly (many times neglected…) a real need for your solution.

Question: Is there an entrepreneur that you see as a role model? Why?

Over the last years Israel has seen a new generation of entrepreneurs, which have the potential to bring the Israeli tech industry to a new level. One example is Dov Moran (Founder and CEO of M-systems, sold to Sandisk). These entrepreneurs have led companies from inception through to multi billion $ valuations. Now they have decided to start it all again, with new startups they believe can become even bigger. Dov is a role model since he is definitely not in it “for the money”. He genuinely wants to make an impact, and is aiming to “change the world” through technology.

TIP: Talia Aben from Gemini posted a few hiring tips from Dov here. His main parameters are:

1. IQ – Intellectual Abilities
2. EQ – Emotional development
3. AQ – Stamina

Question: What was your proudest moment as VC?

I think that my proudest moment is yet to come – when I achieve my first exit in a company I invest and work with throughout its lifetime… Being only 3 years in the industry, this has not yet arrived. Nonetheless, my proudest moments to date have been all those times where I was able to help entrepreneurs drive their companies ahead – such as introducing a portfolio company to their first client, helping bring a key team member on board, or even connecting an entrepreneur to an appropriate investor when we the company was out of our scope.
Question: What are the top services on the internet that you can't do without?

• Netvibes – A great way to centralize my information
• Animoto – I think this represents the new generation of media creation. And being able to compile a personal video clip for friends in seconds is a lot of fun.
• Ning – This service enabled us to develop an Israeli network for Internet entrepreneurs, which has taken off with great success
• And of course two Israeli companies we’ve invested in, eSnips and Supportspace

Learning from other people's mistakes

Talia Aben from Gemini funds caught my attention reading her blog -"Israeli VC on Sand hill Road". In a recent post she listed five rules for entrepreneurs trying to reach VCs. I recommend reading the full post, but here's the gist of it:

Rule #1: Don’t send a “Dear Sir” email just out of the blue

Rule #2: Find somebody that can make a personal introduction to the venture firm. (...especially in Israel!).

Rule #3: Research the venture capitalists background.

Rule #4: Do not approach 20 funds at once.

Rule #5: Keep your opening pitch short.

Reading this post really reminded me of Guy Kawaski's post - "top 10 lies of entrepreneurs". One of my favorites mistakes was this common cliche:

“Hurry because several other venture capital firms are interested.” The good news: There are maybe one hundred entrepreneurs in the world who can make this claim. The bad news: The fact that you are reading a blog about venture capital means you're not one of them. As my mother used to say, “Never play Russian roulette with an Uzi.”

To see the flip side of the coin, I suggest reading the "Top Ten Lies that VCs Tell". It never hurts to learn from someone else's mistakes, right?

ConteXtream Raises $9.6M in First Round

Israel based ConteXtream, developer of grid technologies for media server networks, has raised $9.6M from Gemini, Norwest Venture Partners, Sofinnova Ventures and Benhamou Global Ventures. The proceeds will be allocated to strengthen the company's development team in Israel and finance further R&D activity.

ConteXtream is working on a new type of communication server, aimed to simplify triple-play networks (voice, video, data - Services such as Comcast and Roadrunner). ConteXtream's product offers a new approach that simplifies the operational complexity of the triple-play networks by enabling transition from separate networks for each application to a single unified infrastructure. In simple words, ConteXtream will facilitate the rapid introduction of many new services and business models into a single IP network.

ConteXtream was founded in 2006 by CEO Sharon Barkai, former founder of Sheer Networks (acquired by Cisco) and Xeround Systems, provider of signaling solutions to carriers for VoIP (See my previous coverage here). Nachman Shelef, the Executive Chairman and a former partner at Benchmark Capital, was the founder Nicecom (acquired by 3Com) and later served as a VP at 3Com. Eric Benhamou, 3Com's former chairman is ConteXtream's sole seed investor.

According to Avi Hasson, a GP in Gemini:
"ConteXtream combines all the components that help build a successful company - an outstanding technological concept that addresses large and growing target market with a real problem; an understanding of customers' needs, an experienced founder and a strong technology team."

Source: Globes

Keep an eye on NeoCleus

Neocleus, a security start up in stealth mode was reported to raise $5M in a round led by Battery Ventures and Gemini Israel Funds. This round follows a seed investment of $700,000 made by the two funds a year ago.

Neocleus develops online access security management technology that helps users safeguard their online access. They received the financing round after extensive feasibility studies of the technology as well as market studies.

Neocleus was founded last year by Ariel Gorfung (CEO) and Etay Bogner, both experienced in the security software field. Bogner previously worked for Sofaware, which was acquired by Check Point Technologies Ltd. in 1999 and Gorfung founded of Optibase Ltd and E-Sponsor. The company currently employs 15 people and is based in Tel Aviv.


Read more at: Venture Deal