Keep in mind that there are many more IoT-related startups in Israel than are shown here (some sources show over 300 of them). We tried to focus on the most interesting/advanced companies and organize them in an easy-to-read manner.
One major challenge we faced in conducting this research was to determine which companies are part of the ecosystem. Since the Internet of Things has such a broad definition, we had to start with deciding what “things” are. We used this general rule: “IoT includes every connected thing that is not a computer or a smartphone.” We then made sure that the companies are suitable using the Goldman Sachs’ S-E-N-S-E framework. According to GS, five attributes distinguish IoT from “regular” Internet: sensing, efficient, networked, specialized, and everywhere. This strategy helped us put together what we believe is a good list.
We put a lot of effort into making our map as intuitive and easy to read as possible. The result is a 2D chart on which all companies are organized. The X axis divides the “things” (sensors, actuators, smart devices, etc.) into five categories by usage. The Y axis shows where the company puts its main attention: the connected thing itself, the IoT platform, or data analysis for security/business purposes.
Security and privacy concerns have received massive media coverage in the past few months. Just imagine someone hacking into your home network through your refrigerator, opening your connected door-lock and disabling the connected alarm. Earlier this year, two hackers demonstrated how they could wirelessly control a driving jeep and disable the driver’s control over the brake peddle. There is no doubt that IoT security is a major pain point, and we can see more and more companies entering this domain. As you can see, a few IoT cyber security companies are already on the map. Considering the proven skills and experience in the Israeli cyber security scene, it is safe to say that Israeli startups will play a major role in addressing this important market.
Data-related technologies such as root cause analysis and predictive maintenance (PDM) are expected to bring a dramatic change to the industrial sector in the next couple of decades. Last year, a large American manufacturer announced it was able to generate over $1 billion of revenues by using data-related solutions in its production environment. And this is just the beginning. Israel holds significant talent in various data-related domains such as BI and big data analytics, and we expect to see some new and exciting startups addressing the Industry 4.0 space as well as other deep analytics solutions.
Another interesting IoT vertical that Israel has strength in is agriculture. Since the 1950s, Israel has been a major exporter of agriculture technology (agritech). The combination of various renowned research institutions, advanced bio-tech industry, state-of-the-art farms and comfortable climate, makes Israel a great place for agritech innovation. From drip irrigation to biological pest control, the local ecosystem has been the source for some of the world’s most innovative agritech technologies. Agritech IoT is a multibillion-dollar opportunity, and we expect Israeli startups to get a piece of the pie.
IoT poses a big opportunity for Israeli startups, and we are already seeing fast and keen entrepreneurs coming up with smart ideas and solutions. Time will tell how this market will evolve. One thing is for sure – it will be huge, and the greatest entrepreneurs will build big companies around it.
The article was publised on VentureBeat on December 13, 2015. Click here to see the original article .
For years VCs have preached to their companies the importance of tracking metrics that accurately measure their day to day operations.
Giving advice to others is much easier than implementing it yourself, and it takes guts to honestly measure yourself. When Eitan and I started TLV Partners, one of our earliest decisions was to track our key metrics. One of our top priorities in ensuring a professional experience for entrepreneurs, therefore we defined a set of metrics around our response time. More specifically, how many days it takes us to respond to emails (“respond”), set initial meetings (“set a meeting”), return with an answer whether we would like to proceed (“answer”) and conduct due diligence (“DD”).
Once we defined our metrics (we officially began tracking this data at the beginning of this calendar year), it was time to take a look at our performance. . We were pleasantly surprised to see the results, but there was clearly still room for improvement:
There is a common belief that participating preferred is always better for investors.
Here’s a brief overview of the various liquidation preferences investors may ask for. Liquidation preferences determine how to divide the proceeds from the exit.
VCs have one common goal - they all aim to increase shareholder's value. Many Israeli entrepreneurs share this dream as they want to build long-lasting companies. This alignment of interests makes sure everyone is working to achieve the same goal.
Yet, participating preferred creates an inherent misalignment of interest between VCs and entrepreneurs.
Take for example an entrepreneur who faces a decision whether to sell the company now for $150m. His investors agree that the company’s potential could be much higher in 2-3 years. But the company would have to raise another $20M to reach said potential. Luckily, there is a late stage investor who is eager to invest in the company at a reasonable valuation. The decision should be simple - a good opportunity to increase the value at a reasonable price. But here is where the participating preferred misalignment kicks in. The entrepreneur, upon an exit, will have to pay back an extra $20m plus interest before seeing any profits. Not to mention the fact that he/she will be further diluted. VCs are professional investors and part of their job description is to take risks. Entrepreneurs are dreamers that dedicate their life to build companies. Some entrepreneurs at this point will decide to sell the company and reduce their personal risk. The investors will lose much more than the potential profit from the participating preferred.
Cloud computing is an area we find especially exciting. It has brought enormous change to the world of applications and it would be no exaggeration to say that most of the innovation in IT over the past decade has been enabled, catalyzed, or caused by cloud computing. Currently, we are in the midst of a microservices revolution, one that has, until now, been championed by containers. Through our investment in Aqua Security over a year ago, we have witnessed first hand the rapid growth this market is experiencing, and believe it will continue to proliferate enterprises across the globe. We are now on the cusp of another revolution in cloud infrastructure: the move to serverless computing.