It’s been a weird year to say the least, but Israeli high-tech seems to have recovered quickly from the crisis, and even has stepped up its game. This year Israeli entrepreneurs have aimed to shed the “Startup Nation” nickname, and graduate to the “Scaleup Nation”. Israeli founders haven’t been running to sell off their babies to the highest bidder, instead opting to build massive market giants at astonishing valuations before going public.
With Israel celebrating its Independence Day last week, we decided to go back through the decades and list the top ten Israeli high-tech exits from the nation’s birth until today. As the tech sector experiences unprecedented acceleration over the past half decade, in the last 3 years alone, 3 new acquisitions have broken the top ten.
Google dominates maps game with $1.3B acquisition of Israeli competition
By now, the Waze app needs no introduction. After all, it is used by over 140 million users around the world, who turn on the GPS app for their morning commute. The idea started with Ehud Shabtai wanting his new GPS to be constantly updated with new roads and traffic cams. When mapping companies refused to cooperate with him, he developed an app that maps the roads while driving on them. Very quickly the app, still called FreeMap, gained popularity with a community of over 1,000 users that started mapping out the Israeli roadways, later also reporting traffic jams and accidents.
The small and humble company began to grow; raising $67 million from a number of well known investors and VC funds. Following a long negotiation process, including speaking with Apple and Facebook, Waze was eventually acquired by Google for $1.3 billion. Noam Bardin continued working at Google until six months ago when he left in a storm. Still to this day the Waze app enjoys its army of volunteers, community members and managers that give from their time to ensure that maps around the world meet highest standards.
M-Systems acquired by SunDisk for $1.6B
Israeli entrepreneur and inventor Dov Moran founded M-Systems in 1989. A pioneer in developing memory storage products for the then new flash technology. Possibly the company’s most popular product was a memory drive called Disk-On-Key, which later became the generic device name. Moran, who founded the company, later went on to found a few more startups, including Modu - a modular cellular venture, and dozens of patents. These days, Moran has moved to the other side of the table as an active investor at his own venture firm - Grove Ventures.
ForeScout breaks Israeli cyber record at $1.1B
About a month after Israeli cyber firm Armis was acquired for $1.1 billion, making it the most expensive acquisition of an Israeli cyber company to date, and 3 years after a NASDAQ listing - ForeScout was acquired by private equity firm Advent International Corp. The Israeli company developed remote security solutions for enterprises, and was sold at twice its IPO valuation. The big winner of the ForeScout sale was Israeli venture fund Pitango, which made an estimated $100 million off the deal.
Intel nabs Habana Labs for $2B
Founded in 2016 by David Dahan and Ran Halutz, Habana Labs was accompanied throughout the process by the “Midas King” of chips - Avigdor Wilentz. The Israeli startup develops chips for AI technologies, and has seen better days - Amazon announcing it will use its GUADI chips as part of the AWS services - as well as days not so bright - like when hackers broke into its system with ransom demands.
Galileo acquired by Marvell for $2.7B
A second entry for Avigdor Wilentz, who 20 years before his involvement with the Habana Labs acquisition, had already sold another chip company - Galileo. The astronomical price tag was met by American chip giant Marvell, with Wilentz netting, according to reports, some half a billion dollars from his stake as CEO.
HP flies close to the sun with $4.5B for Mercury
Israeli company Mercury was founded in 1989 by Aryeh Finegold, and developed automated systems for software testing. The company raised a lot of capital, went public and even acquired a few companies of their own, until 2006 when HP came knocking. As part of the acquisition, HP paid a hefty $4.5 billion for Mercury, which became HP’s software division’s R&D center (known today as HPE).
Chromatis Networks sold for $4.75B
Founded in 1998 by Dr. Rafi Gidron, Orni Petruschka, Yossi Shusman, Yair oren, and Steve Koren, the company developed technology to improve data traffic over fiber optic. Two years later, after raising $50 million with no major sales or revenue, Chromatis was surprisingly acquired by Lucent in the year 2000 for a sum of 78 million shares, which reflected approximately $4.8 billion. Not long after, the Dot.com bubble erupted, leaving the communications and telecoms companies, which were supposed to be the major beneficiaries of new tech-focused customers, badly damaged. A little over a year after the acquisition, in August 2001, Lucent officially closed its Chromatis division, chalked it up as a loss and laid off most of the employees, including two of the founders.
Cisco sheds $5B for NDS
Jerusalem based NDS was founded in 1989 by a combined effort of serial entrepreneurs and the Weizmann Institute of Science. The company developed an encrypted DRM system for protecting TV feeds over the different platforms, such as cable or satellite. Over the years, the company had listed hundreds of patents, and at its height employed over 1,000 people at its Israeli R&D center. Among the firm’s investors were Rupert Murdock, News Corp, and the general public (as part of its public listing). In 2012, the company was fully acquired by technology giant Cisco for a reported $5 billion. Shortly after, most of the founding team had retired, and the company’s activity was significantly reduced following Cisco trimming the “fat” at the Israeli R&D center.
NVIDIA taps Mellanox for $6.9B to kick off the “chip wars”
The semiconductor chip scene is sizzling in 2021 - but major movement started two years ago in 2019 when NVIDIA gulped up Israeli startup Mellanox for a smudge less than $7 billion (you really couldn’t have rounded it out NVIDIA?) in all cash. This marked NVIDIA’s record for an acquisition, with the plan to use the Israeli company to expand its growth in the datacenter market. Intel also got involved in the race for Mellanox, but NVIDIA offered nearly a billion dollars more, and ended out on top.
Intel digs $15.2B deep for Mobileye
The biggest deal of Israeli tech was closed in 2017, when another U.S. chip giant, this time Intel, announced the acquisition of Amnon Shashua’s Mobileye, which develops computing systems for autonomous vehicles, for an insane $15.3 billion.
The beginning was a humble one. Back in 1999 Shashua and Ziv Aviram founded a company developing driver assistance technologies. The company’s product is based on cameras and advanced computer vision technologies that alert to hazards in the road, such as crossing pedestrians, reckless driving, proximity to other vehicles on the road, and more. In 2010 the company unveiled its EyeQ chip, and began adding a “neural network” layer; meaning combining past performance and other vehicles to deepen analysis and understanding of the system. In 2016, Mobileye announced a partnership with Intel and BMW, where the three would co-develop technologies for the autonomous vehicle, leading to Intel eventually acquiring the Israeli company in 2017.
It has remained as the biggest acquisition of Israeli company to date, and considering where the Israeli tech ecosystem is headed, with an abundance of growth companies turning into Unicorns by the day; not chasing checks anymore but realizing that there are more opportunities these days to scale, and even go public. This brings up the question: “Will the record be broken?” And the answer, is yet to be written.
