Moving a Technology Company from Israel to America: Perfecto Mobile CEO Eran Yaniv (Part 3)

Sramana: How did you finance the company? Did you get the VCs to finance the concept?

Eran Yaniv: That is an interesting question. The concept we had in place that we were going to use to target mobile developers needed some engineering development. It did not need too much, but to prove the concept we needed some funds. We had worked with a VC in Israel called Carmel Ventures. They gave us a pre-seed funding to prove the concept out and take them, with that concept, to a few potential customers. They wanted to verify, with the market, that this was a good concept to go forward with. They gave us $250,000. We started out, literally, in a garage. We had five people there managing a simple budget. We proved the concept with Vodafone and a carrier in France and got good feedback. We did that tour with the VCs, and that led to our first round.

Sramana: How much was your first round?

Eran Yaniv: We started with $2.75 million from Carmel Ventures.

Sramana: So in 2006 you had received your first round of funding and a notion of market demand from carriers. What happened next?

Eran Yaniv: We developed a product and got another Israeli VC on board. We developed a product and made a few sales in Europe. The use cases for what we had developed were for automated testing for new devices that were being launched into the market. Swisscom was our first customer. We had a very important deal with Vodafone global that basically selected our platform to provide services to their developers with the platforms that they were introducing into the market. That happened in 2008, and it was an €800,000 deal. For a company like us, that was a game-changing deal.

Sramana: By 2008 the application market was starting to heat up around the iPhone, right?

Eran Yaniv: Yes, and I think that is exactly why Vodafone was interested. They wanted to capture the hype and capitalize on their position in the mobile space. We saw the Vodafone investment, and additional carriers get interested in what we were doing. That is where the financial aspect of the market came into play. Markets were not in good shape and were going in the wrong direction, at least as far as small companies were concerned. That was more or less the time when we received our first deals.

As an entrepreneur, you need to take a deep breath, look around you to understand where you are and make some harsh decisions. If you believe what you are doing, then you will be able to survive. We made some very good moves around that time.

Sramana: What were those moves?

Eran Yaniv: We decided that we had human capital that we did not want to give up on. We came to the employees and told them that we had to cut our expenses. We made a conscious decision not to let people go. We released a handful of people go who were going to leave anyways. We had to cut everyone’s salaries by 10%, and management took at 15% cut.

Everybody appreciated that. From a financial perspective, we became more resilient. What is interesting is that people did not leave. Even after the market picked back up, we had very little churn from a human capital perspective.

This segment is part 3 in the series : Moving a Technology Company from Israel to America: Perfecto Mobile CEO Eran Yaniv
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