Waze acquisition could lead way to Israeli Internet growth

Waze acquisition could lead way to Israeli Internet growth

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The billion-dollar sale of navigation company Waze to Google may finally be putting Israel on the map as a major player in consumer Internet innovation.

Israel”s high-tech sector has been dominated by firms that made products for other businesses, like computer chips or communications gear. But in recent years Internet and mobile companies have emerged as the majority of Israeli startups, and many have found success in the global market.

The focus might be changing now.

“There”s definitely a shift that Waze has done a great deal of emphasizing,” said Nir Zohar, the president and chief operating officer of Wix. “I would assume that we will find more foreign investors coming to Israel to invest in Israeli entrepreneurs.” Wix, a personal website company, filed last month for a $75 million initial public offering the United States, just as Google was wrapping up its $1.03 billion purchase of Waze.

Foreign investors are beginning to take notice.

Israeli consumer firms myheritage.com, a genealogy site, and Fiverr.com, an online marketplace for creative services, received major backing last year from Accel Partners and Bessemer, two leading American venture firms.

Veterans of the Israeli Internet startup scene say that Israeli companies are known for their creativity and international outlook, so the move into the fast-growing world of smartphone apps and consumer websites has been relatively easy.

Roughly three-quarters of Israeli startups provide mobile or Internet services, according to IVC. Just five years ago, the number was below 50 percent.

After bottoming out in 2009 during the global financial crisis, American venture capitalists have steadily ramped up investments in Israel. Last year, according to the National Venture Capital Association in Arlington, Va., they pumped almost $85 million of equity into Israeli Internet companies, the highest amount since the global financial crisis five years ago.

Overall, Israel is the world”s largest destination for high tech venture capital after Silicon Valley.

Yossi Vardi, a leading figure in the Israeli tech scene, said the Internet boom is also a result of natural growth. “Every major (acquisition) creates a wave of angels and new investors,” he said. “Angels” are the individuals who make early investments in high-risk companies.

The success of Waze generates optimism among Israeli Internet companies. “All the press that all these exits are getting … creates confidence for future buyers,” said Yaron Carni, a veteran investor and head of the Tel Aviv Angels Group.

Source: Florida Today