ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the October 2012 issue


The Israeli high-tech sector

The Israeli high-tech sector has been criticized for its rapid exits. Nearly every day the business pages cite how a small company has been swallowed up by a large foreign company. Studies have indicated that large companies contributed more to the GDP than small companies.

It would seem that a lack of large companies with experienced management personnel is one reason why small companies tend to sell themselves at an early stage of their development. Another more compelling reason is the innate lack of patience to hit the jackpot.

It will be recalled how three youngsters sold their startup Mirabilis for more than $470m. This exit certainly was an example for many young techiies.

So which side is right? It seems that, to create a winning formula, the Israeli economy needs to generate more large companies, with hundreds of product developers and engineers, which will evolve into mega-exporters and fill the country's coffers with tax revenues.

But as we set out to fulfill this vision, here are a couple of things to bear in mind: First, Israel's pool of talent is finite, and large companies don't appear out of the blue. They depend on local labor and resources, which are functions of population size and investment in technology training. A delicate balance must be maintained between the number of R&D people working in large companies and at the start-ups providing Israel with its competitive edge. Start-ups need to be carefully safeguarded: Any global high-tech company emerging here will likely come from their ranks.

Also, the importance of hosting foreign corporations' operations should not be downplayed. True, Israeli companies have a greater immediate impact on the economy: Their local activities are broader and they generate more tax revenues, while some international companies only do development here. However, foreign companies keep their Israeli R&D staffs at the cutting edge of global developments and introduce sorely lacking advanced administrative and marketing capabilities into the local business environment.

Israel's high-tech exports are estimated to be worth $18.4 billion a year, comprising more than 45 percent of the country's exports, according to Central Bureau of Statistics data.

While many people do not yet associate Israel with technology and startups, Israel has the second-largest concentration of startups per capita after Silicon Valley.

Many of the leading tech companies have established a presence in "Startup Nation" and the latest of the bunch is of course Apple with its acquisition of Anobit and a new R&D center in Haifa, Israel.

As far as the startup world is concerned, what is interesting is that you will find many Israeli entrepreneurs who are not only developing innovative and disruptive technology, but that are actually working on launching multiple startups simultaneously.

Failure in the Israeli startup scene is also handled differently than in other places. Generally speaking, Israeli entrepreneurs do not view failure as a reason to give up. On the contrary, a failed startup is the drive to think of the next big thing and push even harder than the first time.

The following are a relatively small Ilist of sraeli startups operating in various spaces that are developing interesting new technology to say the least.

Tawkon lets you know when your phone is emitting a lot of radiation
Tawkon lets you know when your phone is emitting a lot of radiation, something that might result from talking in an elevator or in another place in which the phone has to work harder to find decent reception. Under normal talking circumstances, the app will tell you that you are ok to to "Talk on", hence the name Tawkon.

While Tawkon has been around for a few years now, the company is growing nicely in the Android community and adding new phones to their list of supported devices every day. Tawkon also made headlines a few years back after Steve Jobs himself sent them an email explaining why the app was rejected from the App Store. His email read "Not interesting". A man of many words. Tawkon is available on the Android Market for free and of course, for iPhone users who jailbreak the device.

Groupshot helps make group photos better
A new iPhone app that was recently featured in the App Store, Groupshot solves a real problem that you might have if you are taking group photos of kids or friends. You know the drill. You shoot a photo. Then another one. And another one. Except in the first one, everyone is smiling except one person. In the second one, someone is blinking, and in the third, someone else was looking in the wrong direction.

With Groupshot for iPhone, you can select which face you want to replace and easily choose the same face from another photo and place it into the original photo. The result is the perfect group shot with no decrease in resolution. It is actually kind of magical. The app is $.99 in the App Store.

Magisto is a good video editor
Speaking of magic, Magisto knows how to pull a rabbit out of a hat. A new iPhone app that brings the Youtube partner to the mobile phone, allows you to take the standard home video shot with the iPhone and easily transform it into a full-fledged professional-looking video production.This is an advanced cloud-based video editing that notifies you via push notifications when the video is ready and it is then stored on Magisto's servers in the cloud.

The results are fantastic and easily shared across your various social networks as well as email. Despite all its advanced features, Magisto is available for free on the App Store.

Twtrland improves Twitter
This one is different than the previous startups in that it is not a mobile app but a Web-based Twitter platform. No, not another Hootsuite, Twtrland solves one of the biggest challenges of using the micro blogging service that continues to take off, namely, how to find relevant people to follow and engage with.

Twtrland enables you to search for any Twitter user, after which you are presented with a whole list of useful facts about that person's Twitter activity. What do they tweet about? How often do they tweet? How often do they reply to people? What were their most popular tweets? And the list goes on. Of course, the data is presented in a very visually stimulating fashion, something we are seeing more of from services like Pinterest. Twtrland has accumulated hundreds of thousands of Twitter users around the globe, a database the company intends on putting to good use to help users in the coming months.

Flyscreen is a widget based RSS reader
An interesting Android app that has made its way over to iPhone as well, Flyscreen is a widget-based reader of RSS as well as social feeds. On Android, Flyscreen can replace your home screen enabling you get quick access to your feeds, something Windows Phone has become well known for with its live tile solution.

Obviously, the home screen replacement is not something supported in iOS so Flyscreen redesigned the app for iPhone to offer a great reading experience with various themes and other nice features. Flyscreen also recently signed an interesting deal wth NTT DoCoMo to bring the Android app to millions of Japanese users.

Outbrain helps publishers get relevant content in front of readers
While many of the above startups operate in either mobile or the social space, Outbrain is a good old-fashioned Web solution that facilitates more effective and relevant content discovery across the Web. Outbrain is also the biggest company on the list with its platform installed on some bigger online publications including Newsweek, USA Today, and TMZ.

The idea is actually fairly simple. As you read Web content, Outbrain uses its advanced algorithm to suggest other content you might be interested in reading based on various parameters. The result is obvious, publishers get more traffic, readers get more content, win win.

Serendip creates personalized radio stations for users
While music apps are a dime a dozen, not many music solutions offer full social integration and global coverage. Serendip does, and then some. The founders of Serendip like to call the service "The soundtrack of Twitter" because of its deep Twitter integration.

Millions of people share music on Twitter throughout the day using sites and services such as Youtube, Soundcloud and Bandcamp, Serendip analyzes that data, creates a personal radio channel for you and allows you to follow people based on personal musical tastes. Serendip is still a closed service by invite only and if you made it this far in the post, you deserve an invite. Click here to enter the service using your personal invite.

Mobli is a photo sharing company with big name celebrities using it.
While the photography-based social networking world has become quite crowded lately with players such as Instagram and some might say, even Pinterest, Mobli is another social network based on photography, but that is where the similarities end. Mobli is both a mobile app as well as a Web-based social network. As far as mobile is concerned, it is available cross-platform on iOS, Android, and BlackBerry.

Mobli has also become well-known for its celebrity participation including Lukas Haas, Paris Hilton, Tobey Maguire, J-Lo, as well as a $4 million round led by Leonorda Dicaprio. Well, the product is nice enough, but this kind of celebrity buzz is sure to bring users as well.

PlayerDuel offers an SDK so you can play friends in different games
Anyone paying attention has surely noticed the explosion in mobile gaming. What is sorely lacking from the hundreds of thousands of mobile games out there is the ability to compete against friends within your favorite games. Playerduel offers an SDK to developers that enables them to simply add a competition layer into the standard mobile game.

In addition to the SDK, users can download many games that already integrated PlayerDuel and test it out for themselves. The problem PlayerDuel solves for developers is actually two-fold. While statistics have proven that users download apps and rarely use them in most cases, a competitive layer is sure to change that. More engagement within an app is also sure to increase the revenue the app generates for the developer. Users can download the PlayerDuel app to see all the games currently using the SDK here.

Loudlee is Pinterest for music
Last but far from least, Loudlee, a recently launched music service is, what many have called it, Pinterest for music. Log in to Loudlee and you will see for yourself. Its big advantage is the beautiful UI and the ability to use the service globally unlike Spotify and other music solutions.

With 50,000 artists and over 3.5M songs, Loudlee organizes the music based on albums, not songs, something some of us old-timers will appreciate. It brings us back to the days before Jobs started the iTunes music store that sells music by song and rips apart (no pun intended, or was it?) the albums artist spent time putting together. Loudlee is also by invite only at this point and guess what? Here's yours!

10-Israeli-startups-youve-never-heard-of

The 5 fastest-growing Israeli startups
Considering it has been dubbed the "Startup Nation," Israel is clearly an important player on the global tech stage. Not only does it have the highest density of tech startups in the world, but these startups attract more venture capital per person than any other country - 2.5 times more than the United States, 30 times Europe, 80 times India, and a whopping 300 times China.

The technology economy that has emerged in Israel is one of the most significant happenings in the world today; not only have Israelis developed crucial technologies that affect our lives daily (including VoiP technology, flash drives, and instant messaging), but Israel's tech initiatives are actually changing relations and the balance of power in the Middle East today.

Of the thousands of technology companies in the Israeli market, Ithe following is a list of the country's fastest-growing startups (either monetarily, based on customers/users, or both) that are most likely poised to transform industries and impact the world. Here are the top five:

Waze offers free turn-by-turn GPS navigation that takes crowdsourced traffic information into account when planning your route. The app also helps you find deals on gas and locates nearby points of interest, such as restaurants and even police traps. Waze (pictured above) has already raised $67 million in venture capital, and reports recently surfaced that Facebook was interested in collaborating with the startup or buying it outright.

Codename One gives developers a write-once, run-everywhere development platform for building native mobile apps across many mobile operating systems, from iOS to Android and BlackBerry. Codename One is open-source and uses special lightweight technology that eliminates fragmentation and offers developers a platform for mobile application development as easy as desktop development. Codename One is helping to defragment the mobile space and has exploded in popularity, having increased its user base 50 percent in the last month alone.

Kaltura is the web's leading open source online video platform, providing over 150,000 universities, enterprises, and websites with a robust set of video software services. Kaltura allows organizations to play, share, distribute, and analyze all things video. The platform has helped businesses set up "corporate tubes" for internal communication and marketing purposes, and has enabled nearly every Ivy League university, alongside hundreds of other schools, to set up "campus tubes" for learning, collaboration, and other uses. Robust expansion and over $40 million raised in venture capital has led to predictions that Kaltura will become one of the world's next billion-dollar tech companies.

Mobli is a visual media platform that lets you share photos and video in real-time with friends or people of shared interests. It gives users the ability to see the world - such as concerts, celebrity sightings, and news events - through any smartphone, creating a visual search engine. The company raised $26 million in venture capital and has added millions of users over the last few months. It counts Leonardo DiCaprio and Serena Williams among its investors.

StartApp is a monetization and distribution platform for Android apps. Launched in September 2011, the company acquired $4.3 million in startup funds and just surpassed 150 million downloads in July 2012. Instead of forcing developers to charge a fee or add advertisements to their apps, StartApp generates revenue by adding a search icon to a user's home screen whenever they download an app. Whenever someone uses the search engine, both StartApp and the developer get a share of the money - a truly innovative way to monetize in the mobile apps space.

These are just a few of the Israeli companies set to significantly change the way we use technology to interact and access information. As the Startup Nation continues to experience rapid growth when it comes to acquiring venture capital and getting its companies on the map, we're sure to see even more innovation from this important player in the near future.



Reprinted from the Israel High-Tech & Investment Report October 2012

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