Israeli upstarts follow money to Silicon Valley

Fifteen Israeli companies show off their technology to a group of investors and tech leaders at Microsoft's Mountain View offices.

Stefanie Olsen Staff writer, CNET News
Stefanie Olsen covers technology and science.
Stefanie Olsen
4 min read

MOUNTAIN VIEW--Israel is brimming with technology upstarts that want what Silicon Valley has--venture money, partnerships, and a bridge to the rest of the world.

On Wednesday, 15 Israeli companies showed off their technology to a group of investors and tech leaders here at Microsoft's offices. The conference, called IsraelWebTour 2008, was like a Demo for Israeli companies, but with potentially more upside for a start-up looking for influential ties.

"I love it. This gives us a lot of first-time introductions to major players like eBay, Microsoft, Google, and Ask.com," said Tai Schwartz, co-founder and CEO of Web analytics upstart Click Tale, who presented at the conference put on by the California Israel Chamber of Commerce. Schwartz, whose company is based near Tel Aviv, said he's staying on for an extra week of meetings in Silicon Valley after the confab.

Investors featured on a morning panel said that Israel is second only to Silicon Valley when it comes to Web entrepreneurs. But the Israeli technology community is so small (more like two degrees of separation instead of six) that it's easier to launch a company there than in the United States, said Yaron Galai, co-founder of Outbrain. To stay in Israel with plans for expansion isn't realistic, investors said. After hammering out the kinks of their technology, Israeli upstarts often venture to the United States for growth and new headquarters.

Eyal Hertzog, founder of video site Metacafe, said that his company suffered by not opening an office in Silicon Valley soon enough. It opened shop in Palo Alto last year after three years in operation, and could have benefitted from the tech expertise and exposure to the Silicon Valley zeitgeist. "People are living the culture here," he said.

The following are a handful of Israeli companies that similarly want to live the culture in the United States and that commanded particular buzz at the conference.

• Delver, social search. Delver has similar characteristics to the crop of people-search engines that have emerged recently. It aggregates data on people by their publicly available profiles on LinkedIn, Facebook, YouTube, and other social sites, using statistical models to sync up profiles. It then creates a "social graph" of who someone is and their connections. But unlike rivals, Delver combines that social graph with a Web database, and then lets users search for information based on their personal social relevance. A Delver user, for example, could search on "Vail, Colorado" to find out which of his or her friends had been there. "This is Web search--we're searching the general Web and cross linking it to your social graph," said CEO Liad Agmon. Agmon said that the company is looking for a Series B round of funding this year.

• 5min, "life videopedia." The idea behind 5min is simple, said CEO Ran Harnevo--everything can be explained visually in less than five minutes. The site, which launched nine months ago, is essentially a clearinghouse for user-generated, how-to videos on anything from "how to dance salsa" to "bartending basics." "It's the junction between know-how video and consumers sharing knowledge," Harnevo said.

The company also developed a proprietary smart player for its video that lets viewers see related links and articles, as well as story boards of the video. Online outfits like Martha Stewart Living can license a white label version of the player. And 5min sells targeted sponsorships for its videos, e.g., pairing a Smirnoff an ad and bartending tips. The company, which is relocating its headquarters from Israel to New York, recently raised $5 million from Boston venture firm Spark.

• 8hands, a unified social feed. Ofer Luft, CEO and co-founder of 8hands, calls his technology a cure for social-networking fatigue. (But what about a cure for downloads?) The technology is a downloadable desktop application that aggregates a user's accounts on Flickr, Facebook, Wordpress, YouTube, Twitter, and others, and pools them into one interface on the PC or mobile phone. Instead of receiving e-mail notifications (the colloquial term is bacon) when friends update their profile, 8hands pushes that event to the forefront of its application. "A Jewish company should be the one to try to rid the world of bacon," Luft joked. The application also integrates a person's phone book, enabling people to dial directly from inside 8hands when on the iPhone or another mobile phone.

• Click Tale, virtual usability lab. For Web publishers that would like to examine minute details on how people respond to their Web site, Click Tale is the answer. Launched in August, the Tel Aviv-based company lets subscribers track the movements of site visitors between pages--down to the last cursor scroll and mouse click. It records individual sessions on a Web site (but still protects a visitor's privacy), and even shows "heat maps" of where on the page an aggregate number of people were drawn to during their sessions. Click Tale CEO Schwartz said that publishers embed a JavaScript code on their pages to collect the details for fees of between $19 and $99 a month. A free version lets publishers see up to 100 page recordings per week. "It's as if you're standing behind the shoulder of the user to see what they're doing," he said.

Yoav Leitersdorf, managing partner at European venture firm YL Ventures, said he's looking closely at the collection of companies from Israel. His firm specializes in spotting younger companies, investing less than $3 million in a start-up, and then taking them to the point of a buyout or merger with a larger company, such as Google or Microsoft.

"Israel's got smart entrepreneurs who know what they're doing," Leitersdorf said. "It's such a small market, everything in Israel has to go abroad. Clearly, the U.S. market is the biggest and most lucrative."