A Map of Israel's Growing IoT Landscape

  • By TLV Partners
  • 13 Dec, 2015
By Eitan Bek and Roy Leiser
In the 2014 movie Transcendence, Johnny Depp plays a super powerful virtual sentient being with limitless power. In one scene, scientists examine a sample of rainwater under a microscope only to realize that it is swarming with intelligent nano-robots. These nano-robots are connected to, and controlled by Depp’s character, allowing him to transform everything in the world.

Perhaps rainwater is not connected to the cloud at the moment, but it seems that almost everything else is either already connected or going to be in the next few years. Gartner, McKinsey, and other research groups all predict that the Internet of Things (IoT) will be a very large market.

And we’re seeing brand new companies spring up to develop IoT technologies — everything from innovative sensors to dedicated platforms and new devices. Israeli companies are following the trend. Dozens of IoT-related Israeli startups have been founded to date, and many of them have pulled in significant funding. To have a more comprehensive understanding of the opportunities within this “Next Big Thing,” our investment firm, TLV Partners, mapped out the local landscape. The map is still a “work in progress,” and we welcome any feedback and comments to help us refine it.

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.

The Companies
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.

The Categories
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 .

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TLV Partners Blog

By TLV Partners 13 Dec, 2015
By Eitan Bek and Roy Leiser
By TLV Partners 04 Dec, 2015
They will be joined in the round by hi-tech entrepreneurs Michael Fey, President and COO of Blue Coat Security; Giora Yaron former Chairman of Mercury and Boaz Chalamish, former SVP and GM of VMWare.

Scalock was founded in 2015 and has 10 employees. The company develops SaaS security solutions for virtual containers (e.g. Docker). Scalock’s product provides protection and security against internal and external threats to container-based applications and micro-services, and a complete access control mechanism to monitor and enforce security for virtual containers in run-time. The company plans to use the funds raised to establish its presence in the US.

Dror Davidoff and Amir Jerbi the founders of Scalock, are both seasoned Entrepreneurs with an extensive background in the hi-tech industry. Davidoff was the CRO at Clicktale, and EVP of Sales at Sentrigo and Cyvida. Amir was principal software architect at CA Technologies and led the development of virtualization technologies and cloud environments for CA’s ControlMinder product line.

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By TLV Partners 04 Nov, 2015
Pitching to VCs is much more than just going over a presentation. Your presentation can help you better articulate yourself, but even the best presentation can’t compensate for interpersonal mistakes. One of the common mistakes founders make in the first pitch is to cover as many aspects of their business as possible, instead of focusing on a small set of the best selling points. The purpose of the first pitch is to ignite interest and to convince the VCs it is worthwhile to start a due diligence process. You will have enough time to go over all aspects of your business if successful.

Some Do’s and Don'ts of Pitching to VCs:

  • The presentation should be short and clear. The VC is trying to digest the main aspects of your business in a short timeframe, not to become an expert in your technology or market.

  • Don’t come alone, VCs don't like sole founders. They look at it as a sign that the Founder is either failing to attract talent or afraid of strong people around him/her.

  • The team is one of the strongest selling points you have, assemble top notch professionals and let them present some of the slides. It is extremely unattractive to have the CEO present while the other team members sit quietly during the whole meeting.

  • Solve your team conflicts before you start fundraising, and never reveal them during your pitch.

  • Invest time in sizing your market. As a rule of thumb, the VC is looking for companies that have the potential toexceed$1B in value in a few years. We are looking for a market size of at least $700M-$800M, so come prepared with all the necessary data to prove your market size. Your ability to find the correct data and do the math right is also being assessed.

  • Validate your market - you don't need millions of dollars in your bank account to call potential customers and set validation meetings. Fundraise after you have at least 5-6 potential customers who are willing to talk to VCs and be your design partners.

  • Prepare a prototype to demonstrate your product. They say a picture is worth a thousand words; a demo is worth a million.

  • Surprisingly enough, most investors will spend a lot of the time on your projected financials even though everyone understands that Excel can tolerate any assumption. It is important that you look at comparables in your industry and fully understand revenue growths, expected costs and all business model assumptions.

  • Do some basic research on the VC and their portfolio before you set a meeting. Discovering ten minutes into the meeting that the VC just invested in your direct competitor is frustrating and embarrassing.

  • Don’t become defensive. The VC may ask you some tough questions or argue with your assumptions. Dealing calmly with the challenge will impress the VC; becoming defensive will end the meeting promptly.

  • Come to the meeting open minded and be prepared to learn. VCs usually invest in one out of every 100 companies they asses. You can benefit from the meeting even if you don’t get the funding.

  • Regarding valuations - how much you should aim to raise and how to deal with the valuation negotiation - the best advice here is to follow the norm, which may change with market conditions. For example, if good A round companies in 2015 are raising an average of $4m-$5m for 33% of the company, you will need a good reason why you are raising only $2M, or $8M, or why your valuation is much lower or higher. Unless you have a good reason, you will be viewed as either desperate or out of touch with reality.

  • Last advice - unless you have a clear indication that you are about to receive a term sheet from other VCs, try not to share too much information. You can safely assume that the VCs all know each other and will share information with one another. 

Feel free to ask us questions, we are happy to help.

Good Luck!

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By TLV Partners 02 Oct, 2015
By Rona Segev
By TLV Partners 02 Sep, 2015

Application virtualization or containers is seriously threatening the dominance of traditional OS level Virtualization. In a Survey done by ETR, Docker is growing faster than anything ever seen in history of ES. In fact, as of April 2015 Docker was at 97% usage and purchasing intention by enterprises.

The numbers for Docker’s project growth stats are shocking as well. In the past year alone, the project has experienced a 183% increase in contributors, 515% growth in projects on GitHub, and an astounding 18,082% spike in container downloads.

Container technology was in use for years, with companies like google using it in their data center for the last decade, but then came Docker. Docker is an open source project that automates the deployment of applications inside software containers. Docker did something simple butrevolutionary: they automated and massively simplified the whole process. in simple language, Docker is a tool that can package an application and its dependencies in a virtual container that can run on any Linux server. Unlike full virtual machines though, a Docker container does not include a full virtualized OS, but rather shares the OS of its host.

The Eco-system around containers is developing quickly. Docker has done fantastically at making containers appeal to developers, and the next stage is to disrupt production. Many small companies are using containers already on public clouds, but in order for containers technology to seriously threaten OS level virtualization, some components are still missing. Partly because the eco-system around containers is still very young, but also because containers are a different animal, and new technologies need to be developed in order to solve the regular issues in developing, testing, deploying, managing, monitoring and securing containers. There is plenty of room for innovations in this space, although many areas are already covered by startups.

Webelievethat we are at the beginning of a real disruption in the virtualization world, and that containers arequickly going to becomethe preferred environment to run an application. Areas in which we are interested are: networking, storage and security for containers. If you are developing something around containers, please give us a call; we would love to learn more.

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By TLV Partners 01 Sep, 2015
The first step in any journey is often challenging and exciting. Your first idea, your first startup, your first investment, your first hire... even your first blog post. So - welcome.

We launched TLV Partners in 2015 after working together for ten years as General Partners. During that time, we identified a significant gap in A-round funding for Israeli startups. We noticed that many founders manage to successfully raise seed funding, but struggle to find the financial support to raise the A-round. As firm believers in innovation and the importance of making an impact right from the first steps, we decided to take the plunge and set up our own fund with an A-round focus.

We are committed to doing things differently; we make fast decisions in a friendly and open manner and work with entrepreneurs to achieve the greatest potential outcome.

Who We Are Looking For
First and foremost, we are looking for entrepreneurs that are passionate about what they do and are true team players. We are looking for “Game Changers” – technologies that make our jaws drop, even after all these years seeing great companies.
We get excited by startups that are changing the way things work, the way people think and the shape of our future.

Entrepreneurs Matter To Us
We look to truly partner and get involved with the startups we invest in. VCs are often too focused on themselves and lose sight of their role in assisting the entrepreneurs. We see the entrepreneur as the center of the investment, not the VC - it’s your idea; we are just here to help you make it happen. Entrepreneurs are an inseparable part of our fund – your opinions are of great value, your wins are our wins, and your losses are our losses. We value talent, honesty and friendship, and believe that our entrepreneurs deserve no less.

All Hands on Deck, Literally
Of course, we aren’t just about offering funding and sending you on your way. We take a very hands-on approach with our portfolio companies, standing by them through the good and the bad. We help entrepreneurs create the ideal “product/market fit” and gain the initial market traction they need to succeed.

With strong roots in Silicon Valley , we understand that relocating to San Francisco is often key in taking your company to the next level. We also understand that relocating your business and your family isn’t easy. That’s why we help to facilitate the process and ensure the transition is as smooth as possible. This includes everything from finding office space, opening doors and business development, to fundraising and recruitment.

Being part of the community is a strong contributor to the success of a startup. We work closely with leading angels and entrepreneurs in the hi-tech ecosystem in Israel and Silicon Valley to ensure you have the resources you need. All of our companies, past and present, remain an integral part of our fund and are there to provide support for our newly funded companies.

Being part of the startup community means that we are all here to help each other. Follow our blog as we share with you our experiences and insights on building success in today’s hi-tech ecosystem.

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