Which Israeli start-up will be next in the billion-dollar club?

Hunt is on for next Israeli 'unicorn'

MAY 6, 2017 00:17

Updated: MAY 11, 2017 14:46

THE TEL AVIV skyline (photo credit: REUTERS) — THE TEL AVIV skyline

(photo credit: REUTERS)

In the wake of Intel’s $15 billion decision to acquire Mobileye in March, momentum in Israel’s start-up scene is building faster than ever.

Israelis continue to excel across a wide spectrum of sectors such as cyber security, transportation technologies, energy, water and big data, positioning the country as an international leader in the hi-tech community.

More and more local innovators are gaining global recognition, both from a technological and financial perspective, inching their way toward that coveted “unicorn” status, or the $1b. mark.

Intel buying Israeli driverless car-tech firm Mobileye for $15 b. (credit: REUTERS)

“These companies that are quote-unquote unicorns are being built in a country the size of New Jersey, surrounded by enemies that want its destruction,” said hi-tech expert and start-up consultant Hillel Fuld.

“The country has every excuse to lay back and say, ‘Forget it, we have too many challenges.’” These challenges notwithstanding, Fuld stressed that Israel’s innovators are pressing on, and lead the way or come in close second in “every single vertical of technology.”

“We talk about the strongest verticals or strongest trends or companies, but across the board it’s not an exaggeration to say Israel is a tech superpower,” he said.

Rather than excelling in one specific area in the hi-tech world, Israeli start-ups tend to do well in “any industry where you can apply deep learning and machine vision to change the rules and dynamics of an industry,” said venture capitalist Michael Eisenberg.

“All sorts of areas of industry that consumed software in the past to increase productivity will now become industries entirely composed of software themselves,” he added.

Like Eisenberg, Dr. Yossi Maaravi, deputy dean of the Interdisciplinary Center Herzliya’s Adelson School of Entrepreneurship, said that the most successful Israeli start-ups share key traits, including the use of data and machine learning in a smart manner.

The most fruitful start-ups may begin by focusing on a niche area of expertise, but they tend to expand to a broader community reach and go after a huge market, Maaravi explained.

Another key quality shared by ambitious companies is their ability to “disrupt,” or do something in a completely different way from their competitors, he said.

“They really work in domains that are growing, that the markets are ready to accept such innovation,” Maaravi added.

While it may be impossible to identify which Israeli start-ups truly have the potential to become the country’s next Mobileye, The Jerusalem Post is offering its best guess of five of the most promising candidates in an array of sectors.

Argus Cyber Security

Tel Aviv

With autonomous cars emerging on roads around the globe, defending the vulnerabilities of these networked vehicles has become an increasingly urgent challenge. A rapidly rising Tel Aviv-based company, Argus Cyber Security, provides comprehensive cyber security solutions for the automotive industry, preventing hackers from threatening commercial cars and other networked vehicles.

Since its establishment in 2013, Argus has raised $30 million in equity funding, opening up offices in Michigan, Silicon Valley, Stuttgart and Tokyo, according to start-up directory Crunchbase. As increased connectivity helps improve road safety and transit experience, Argus looks to thwart the accompanying security risks and make today’s vehicles less vulnerable to attack. The company works with private and commercial manufacturers, suppliers, fleet managers, dealerships and after-market connectivity providers to prevent malware installation, detect operating system anomalies and stop attacks from spreading within vehicle networks.

Zebra Medical Vision
Israel PM Netanyahu meets Chinese President, Baidu CEO in Beijing, pushing Israeli hi-tech in China (credit: REUTERS)
Kibbutz Shefayim

By harnessing advanced machine-learning techniques to analyze medical images, this Kibbutz Shefayim-based start-up aims to help medical professionals generate automated, accurate and timely diagnoses.

After raising $8m. in 2015, just a year after its founding, the company received an additional $12m. investment last year. Zebra’s self-described mission involves “teaching computers to detect and diagnose critical medical conditions” through algorithms that strive to assist radiologists in detecting indications that might otherwise be overlooked, and in understanding the medical profiles of their patients.

Topping start-up rankings on tech websites worldwide, Zebra hopes to make a significant impact. An aging global population and a rapidly growing middle class have created an “unsustainable course” wherein the demand for medical imaging solutions is far outpacing the supply of doctors who can supply these services.

Lemonade
Tel Aviv

Powered by artificial intelligence and behavioral economics, Lemonade provides peer-to-peer insurance for homeowners and renters. Customers can purchase insurance with the touch of an app, interacting with bots and machine-learning mechanisms instead of brokers and bureaucracy.

Rather than incorporating a traditional insurance mechanism, Lemonade takes a flat fee and donates unclaimed money to a cause of the policyholder’s choice in a “give-back” system. People who support the same cause are the “peers” in the company’s peer-to-peer insurance model.

Six months after Lemonade’s launch in New York, where the company is now headquartered, the insurance became available in Illinois in April. Lemonade is slated to roll out throughout most of the United States over the course of the year, according to the company. As of December, the company had raised some $60m., but two weeks ago, Allianz, the world’s largest insurer, announced that it would be making a strategic investment in the start-up, though it did not disclose the amount.

Hometalk
Jerusalem

The world’s largest do-it-yourself community, Hometalk boasts some nine million members who share their DIY home and gardening projects, ideas and questions through blog posts, Pinterest photos, videos and slide shows.

Projects posted on Hometalk, which receives some 40 million monthly visits and 300 million monthly page views, range from making nontoxic reusable cleaning wipes from old T-shirts to revitalizing discarded furniture to planting tabletop gardens.

The majority of Hometalk’s traffic comes through a variety of social media channels, as users share viral posts to friends on their networks.

Unique among Israeli start-up success stories, Hometalk is a “bootstrapped” business: Its founders built the company with little capital and without external fund-raising. Founded in 2011, Hometalk has offices in Jerusalem and New York.

Moovit
Ness Ziona

With more than 55 million riders in 75 countries, Moovit unifies all types of public transportation travel under one umbrella, enabling members of the public to both plan their trips and track arrival and departure schedules in real-time.

A community-driven app, Moovit integrates official public transportation data with crowdsourced transit updates, in order to increase the accuracy of the information provided to users.

In addition to beginning its own Moovit Carpool service last year in Israel and Italy, the company teamed up with Uber to integrate ride-share options in 22 of the countries where the public transit app operates. The collaboration with Uber built upon previous such partnerships formed with ride-share service Lyft in 2014 and Gett, an on-demand taxi provider, in 2015.

After raising $81.5m. in several financing rounds from 2012 through 2015, Moovit received an investment of an undisclosed amount at the end of 2015 from Sound Ventures, a venture capital firm cofounded by actor Ashton Kutcher and Israeli-American businessman Guy Oseary.