Israel – Deal(s) of the Month (June 2007)

By Danny Cohen, Guest Author

Starting this July, I will be reviewing every month one or two key venture investments that were done in Israel. The idea is try to present the local Israeli hi-tech scene through representative venture investments. Overall, June was a very active month on the Israeli scene (Examples include Optier and Exanet), but the 2 worth mentioning are Gizmoz and Altair.

Gizmoz announced their first venture financing, led by Benchmark and Columbia Capital on May 31^st. The company “offers consumers a new generation of character-based visual expression for use across their digital lives”. Gizmoz is not a new company. In fact, Gizmoz is the official rebirth of a Web 1.0 company called Zapa Digital Arts, a company that was born in mid 1990s, raised over $25M, and employed some of the key figures of the Israeli internet scene. In fact, a few of the ICQ founders, probably the most known Israeli Internet Company to date, worked in Zapa before they started ICQ. I guess the story of Gizmoz shows that timing is everything, and that the same product 10 years ago, had no chance to gain momentum, and today it seems like a very interesting opportunity.

Altair Semiconductor announced their 2^nd round financing, led by Bessemer Venture Partners. Previous investors include BRM, JVP and Giza. Altair “is a fabless semiconductor company based in Israel that is developing state of the art, ultra low power mobile WiMAX silicon solutions optimized for handsets and handheld devices.” Their story is typical for a modern Israeli startup. The 3 founders were all early employees in a successful startup (Libit Signal Processing) that was acquired by a major US company (Texas Instruments). Between 1999 and 2005, the 3 founders worked at TI in various positions, and left as a group to start Altair. They brought to the new company their old startup experience and some large company management skills. From a funding perspective, Altair represents the current trend for a lot of Israeli companies: the first round is led by Israeli VCs, only to be followed by a top-tier US fund. In this case, Bessemer decided to lead the B round, as they did in a similar company called Siano, back in April 2006.

Both Gizmoz and Altair were funded by US VCs that are increasing their presence in Israel with either dedicated funds (like Benchmark and Greylock) or dedicated Israeli partners (Like Bessemer and Lightspeed).