When it comes to Cisco’s history in Israel, it’s easy to let the numbers tell the story of growth
Since setting up operations in the country 23 years ago, Cisco has directly invested in five funds and 35 startups. Of the startups Cisco invested in, 16 companies were acquired and two startups have gone through IPOs; those figures translate into exits in excess of $2 billion and an investment of $2 billion in the Israel tech ecosystem over the years.
“We are proud to partner with Israel,” Cisco Chairman and CEO, Chuck Robbins, said during his recent visit. “The incredible amount of innovation that comes out of Israel is something that we look forward to continue driving in the future.”
As Israel celebrates its 70th anniversary of independence, let’s take a look at the growth of Cisco investments in the Startup Nation, a nickname that Israel earned by having the most startups per capita worldwide. It’s no wonder why Israel, a country smaller than the state of New Jersey, is one of Cisco’s largest markets for investments outside the United States.
Cisco Israel started in 1995 with 15 people. Operations has grown substantially since then. Cisco Investments currently has 15 active Israeli companies in its investment portfolio. To date, Cisco has acquired 11 Israeli startups (of which two were portfolio companies, Riverhead and Actona), while other Cisco-invested startups were acquired by well-known tech companies, including Qualcomm, Broadcom, IBM, Red-Hat, and SAP.
Moreover, Cisco Israel alums have gone on to further feed the innovation ecosystem. Over 25 startups have been co-founded by former Cisco Israel alums, including Qumranet (acquired by Red-Hat), Wanova (acquired by VMWare), Sookasa (acquired by Barracuda), Kagoor(acquired by Juniper), HPE (acquired by HPE), CloudOn (acquired by Dropbox).
Benny Schnaider, an Israeli serial entrepreneur, who founded various startups, including Qumranet, in which Cisco invested in recalls, “Qumranet developed KVM, the leading open source hypervisor that powers most of the modern clouds today such as Oracle Cloud, Google Cloud and recently Amazon AWS. Around 2007, in the early days of KVM, Qumranet was looking for partners to deploy KVM in production. Cisco, which made a strategic investment in Qumranet, also adopted KVM in one its major products (WaaS) and delivered tremendous value in terms of both product feedback and suggested features, as well as product vetting in Qumranet gaining a reputable customer. We were also able to leverage this as a reference”.
Future outlook of Israeli startups
A report of Startups and Venture Capital in Israel, conducted by tech publication Geektime in partnership with Cisco Investments and other companies, found that funding in 2017 concentrated in three sectors: cybersecurity, autonomous vehicles, and artificial intelligence. The focus on these technologies shows that Israel will continue to be a thriving marketplace for tech entrepreneurship.
“This diversity of technology segments, which correlates well with Cisco Investments’ priority areas, makes Israel a fertile ground for strategic innovation investments,” said Daniel Karp, Director of Cisco Investments in Israel. “As Cisco broadens the scope of its areas of investments beyond our core, to include segments such as Cloud, Security, Collaboration tools, AR/VR, AI, Computer Vision, Robotics and Silicon, we find that the local ecosystem produced expertise in every one of these segments. Moreover, this is a tightly-knit ecosystem, and Cisco’s front-and-center role in its evolution helps us stay close to and be trusted by the country’s most innovative startups.”