Fresh off the success of some of Israel's first ever tech unicorns -- Waze, Wix and ironSource among others--"the startup nation's" thriving tech-industry might be home to a new set of high-valued startups very soon.
With solid backing from experienced entrepreneurs, new inflow of funds from Chinese investors, and industries needing innovation, companies like Webydo and Meta are aiming to be the next Israel startup unicorns.
Webydo offers a code-free cloud platform that empowers web design professionals looking to break away from the traditional process of handing work off to a developer, or the less desirable alternative of using amateur tools. Last year, the company raised a $7 million Series B investment led by OurCrowd, Magna Ventures and a group of strategic investors. To date Webydo has raised $13 million.
Meta is the maker of the Space Glasses that some believe will see greater acceptance than its rival, Google Glass. While the glasses are not yet ready for the mass market, Meta managed to raise almost twice its original goal on Kickstarter, and the Developer Kit is now available for $667 on their website. This is less than half the price of Google Glass, but with more features and a more pleasing design. The company raised $23 Million in Series A funding in January 2015.
The Unicorn Club
The term "unicorn" was coined by Aileen Lee of Cowboy Ventures on TechCrunch back in 2013, and refers to tech companies started since 2003 that are valued at $1 billion by private or public markets. At the time, there were 39 U.S. companies identified as unicorns, while Israel had yet to declare any such "rare, mythical creatures."
Today, Fortune lists just over 100 US-based unicorn startups, and Israel has proudly produced several of their own -- thanks, in no small part, to venture capitalists investing millions into Israeli tech-businesses.
"Israel has produced ten billion dollar unicorn exits over the last two years," says tecnhnology VC Johnathan Medved, CEO of OurCrowd. "This pace is about to accelerate. What's driving this tech blue and white rush is the abundance of home grown serial entrepreneurs, a huge influx of Chinese money, hyperactive overseas multinational acquires and willing stock markets ready to take Israel's latest and greatest public. We are hooking up thousands of individual investors to this exciting tech ecosystem so they can invest in the next unicorn like Webydo. Webydo represents the best Israeli technology meeting the dynamic demands of a burgeoning internet driven economy."
As mentioned by Medved, Chinese firms have started investing in both Israeli venture capital firms and tech companies. Israel's Carmel Venture Funds raised a $194 million fund with the assistance of Baidu, Qihoo360, and Ping-An in October. Baidu also invested $3 million in video capture firm Pixellot, its first Israeli startup investment. Alibaba invested in its first Israeli tech company, investing approximately $5 million in QR code startup Visualead.
Israel's "Silicon Wadi" is the number two start-up market in the world, second only to Silicon Valley in California, with over 6,000 startups being founded in the last 10 years. It currently has about 70 active venture capital funds, of which 14 are international VCs with Israeli offices.
Both KPMG and Israeli-based research center IVC report that Israeli high-tech and life sciences capital raising set an all-time record as 688 companies raised $3.4 billion in 2014. This amount was 46 percent higher than 2013, when 659 companies raised $2.3 billion.
Singulariteam is another venture capitalist firm funding Webydo and Meta. The fund is dedicated to funding and supporting Israeli-based startups aiming to disrupt the B2C and B2B tech industries in areas such as web design, development and wearable technology. The firm was founded by the CEO of Mobli and the popular Yo mobile app, Moshe Hogeg.
Other market disrupting Israeli-based tech companies that have received funding from Singulariteam include StoreDot, a smartphone battery that promises to charge devices in less than a minute; IntelAgent, an algorithmic trading firm; and Hop, a mobile application that transforms standard emails to look like text messages.
The Future of Israeli Startup Unicorns
While Israeli companies are coming up with new technologies and now have the capital to bring these ideas to market, there is one key element missing that might be a challenge to achieving the level of success of their American counterparts--access to experience.
One of the highlights of the research into unicorn startups done by Aileen Lee and Cowboy Ventures team, was that all but two of the 39 unicorn companies which existed at the time had founders with prior experience working in tech/software. This means that, to succeed, Israeli companies will need investors or mentors who have previously built tech companies--and most of those are in Silicon Valley. Hopefully, the performance of these recent stars will influence those with experience to dedicate their time and efforts to potential Israeli unicorns.
This much is clear: as more venture capitalists keep investing in Israeli startups and they come up with amazing new technologies, expect to hear about even more Israeli startup unicorns within the next couple years.