Childs Play: Israeli High Schoolers Create Uber Popular Online Game

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The story of 16 year old Ido Tal and 19 year old Hen Mazolski can inspire bootstrapping entrepreneurs around the globe. The two high school students co-founded WeCreateStuff and didn’t think that the flash game they had developed without ever meeting face to face would get any attention. After recording 5 million (!) downloads, winning several gaming awards and getting flattering emails from leading gaming companies and a spotlight in New York Times, even they were convinced they did something right.

Ido and Tal developed a 2D flash version of Valve’s excellent puzzle game “Portal”. As opposed to the original game, Ido and Tal’s paired-down version doesn’t require additional software beyond Adobe Flash, which lives in almost every browser. The work on the project took several months, but was done completely remotely, as the two only met each other at GameIS08, a gaming conference in Israel, after the game was released.

Flash Portal is a puzzle game, that uses the same basic game mechanics of the original packaged game in which gamers can create portals between two surfaces. Your goal as the player is to find the exit door and get out of the room. In 40 different challenge maps, you’ll have to create portals from one surface to another. For example, if you put one portal on the floor and the other one on the ceiling, walking through the floor portal will drop you from the ceiling. It’s pretty addictive once you get into it, but don’t take my word for it, click here to play or watch the game’s demo videos. I embedded one below for you:

Since it’s release a few months ago, the game has been an immediate success. It was put onto popular gaming sites such as Newgrounds and Kongragate, and stats show that over 5 million people have already played. Most recently, Flash Portal got its young creators the Israeli Oscar for Online Gaming, a great honor considering that this is the first time the award was given to anyone. The word traveled fast and reached the offices of Valve Games, who contacted the two congratulating them on the flash version of their game.

Needless to say that the gaming market is a real money maker. According to NPD, the gaming industry generated $18 billion in 2007, in the US only. Just this week, the release of GTA 4 has broken every record, with sales of $500 million in one week! I will continue keeping an eye on the Israeli scene in particular. Other Israeli companies in the industry include Pilon Games, Oberon Media and Funtactix.

Click to enlarge the thumbnails of Flash Portal:

Popularity: 7% [?]

May 9, 2008 | Leave a Comment

Filed Under Flash Portal, Oberon media, gaming, weCreateStuff

Oversi Solves The Video Traffic Jam

Israeli startup Oversi officially presented OverCache MSP, a platform aimed to help Internet service providers manage and monetize over-the-top (OTT) video, ultimately improving the speed in which end users consume video.

According to a recent study presented by the Pew Internet project, 48% of internet users have been to video-sharing sites such as YouTube and the daily traffic to such sites on a typical day has doubled in the past year in the US alone. That puts the ISP’s in serious bandwidth crunch as the connection gets crowded.

Oversi’s video demo presents the solution with an amusing tone. OTT video is delivered to the end user from a provider (say Youtube, Hulu, Current, etc) through the operator’s network continuously, incurring a high cost to the service provider. Using Oversi’s OverCache MSP service, videos are detected intelligently, cached and delivered on demand to the users. There are several benefits to this solution:

1) No more waiting for the Family Guy episode to load on Hulu. The user gets accelerated content delivery.
2) Get more bars in the wifi connection at the conference. The network load is relieved.
3) If you are a big video publisher that wants to guarantee the best experience for your users, you may agree to pay a fee to get your content cached for quick delivery. New monetization opportunities.

In the official press release, David Tolub, President and CEO of Oversi, said:

“Users satisfaction with their service provider is directly linked to the quality of their online video experience. Our customers reported a dramatic drop in support calls to their call centers since the MSP has been in operation. Average user Internet video download times have been reduced from 35 seconds to eight seconds, and the system has generated bandwidth savings across the network and over the interconnect links.”

Oversi has raised $9.3 million to date from Carmel Ventures, Cisco and Stage One. The company was founded in 2004 by Ofer Wald (founder of Surfree) and Eitan Ofri. Oversi is an alumni of the LabOne Innovations incubator program based in Tel Aviv. Among its competitors are Israel’s PeerApp and US-based CacheLogic.

Popularity: 12% [?]

May 8, 2008 | Leave a Comment

Filed Under Cisco, Stage One, carmel, oversi

Israel Turns 60, The Silicon Wadi Flourishes (See Poster)

It’s not every day that Israel celebrates sixty years of independence, and despite of global and local economic and political shocks, Israel’s economy is stronger than ever. Here are some of the reasons that make Israel and the Silicon Wadi a strong investment destination:

The Shekel is growing faster than than the dollar
Israel has 150 publicly traded companies on NASDAQ! That’s more than any other country apart from the US. (see the full list)
Unemployment is at its lowest level since 1990, falling below 7%
The government foreign and local currency bond ratings have been upgraded from A2 to A1
Microsoft, Yahoo, Google, IBM and others bought Israeli companies this year, strengthening their R&D Centers in Israel.
Foreign investments, Venture Capital funding ($1.1 billion in 2007) and M&A activity are all reaching record levels that compare to the high tech boom in 2000.
Spending by foreign tourists in Israel totaled $2.4 billion last year, 16.5% more than in 2006. (Central Bureau of Statistics)
The MacBook Air’s song “New Soul” performed by Yael Naim topped the sales iTunes this year, passing Britney Spears and Madonna

In order to celebrate the occasion, VC Cafe put together a small present, a map of our own little “Silicon Wadi” featuring over 75 web 2.0 companies active in Israel.

Click to enlarge the Silicon Wadi Poster:

Feel free to download this image, but please link to the source -the content on VC Cafe is protected by a Creative Commons License. If you have a web 2.0 company in Israel and your logo is missing from the Silicon Wadi poster, please send it to me with a link to eze at vccafe dot com.Looking to decorate the office with this cool piece? Posters in HD quality will be available for sale in the next few days.

Happy 60 Israel!

Popularity: 27% [?]

May 7, 2008 | Leave a Comment

Filed Under Israel, Silicon Wadi, VC Cafe

12 Israeli Startups To Compete At The IVA Finals

On May 19-20, Globes, DEMO and Red Herring will be holding a startup competition at the Israel Venture Association (IVA) conference. Each startup will have six minutes to present and the winner will receive automatic entry as a finalist at Demo Germany, a profile on Red Herring Magazine and the Israeli media.

This is the first time that the IVA hosts a startup competition and it seems a little haphazard to me. The winner will be selected by a panel of experts and by SMS voting of the hi-tech community in Israel. Each vote is equal. I’ve seen the SMS voting done in a conference before, and it’s not necesserily objective. Also, since Demo Germany doesn’t have a life sciences category, if the winning company is from the healthcare space, its prize will be substituted with $2,500.

The criteria for the applicants was pretty straighforward. They have to be private companies funded by an investor who is a member in the IVA with revenues less than $20 million and a precesnse in Israel. Most importantly, apart from the life science participants, the company has to have a product that can be demoed without powerpoint slides. Each participants will be required to describe their product’s competition and how their product will compete with it. And the Finalists are:

Early Stage:

ID-U Biometrics - Focuses on homeland security, developing a biometric identification platform that can identify a person by the movement of his eyes. The eye movements of a person are similar to finger prints, and using a camera and advanced software ID-U Biometrics can be deployed on airports and government facilities as well as in consumer applications. The company doesn’t have a website yet (Hebrew), but has raised $100K from Trendlines Israel Fund.

Modu -Modu is a tiny modular phone that can be slipped into different device “jackets”— like an MP3 player, GPS, bigger cell phone, car stereo, or digital camera.Think of Modu as an expanded SIM card. About the size of an iPod Nano, it can place calls, send text messages, and hold contacts. Modu can be inserted into different device jackets, depending on the functionality needed. CEO Dov Moran was the founder of M-Systems, who pioneered the concept of Flash Drives. So far Modu has raised $50 million from founder Dov Moran, Genesis, Gemini and Sandisk. The company plans to raise an additional $70 million.

Delver - formerly known as Semingo, Delver is developing a social search engine that enables users to find content, media and people within their network. By indexing the social web (think Facebook, You tube, Flickr) and combining with the social graphs (think data portability), Delver is able to delver search results that would algorithmically be filtered for relevancy. Shortly after the company was founded in 2007, Delver has raised $2.25 million series A from Carmel Ventures. Founders are CEO Liad Agmon (who already sold Onigma to McAfee), Avital Yachin and Sagie Davidovitch.

Life Sciences:

Pet Novations -founded in 2005, PetNovations decided to focus on the pet product industry. The company’s first product, Cat Genie, is an automated-clean litter box for cats, a serious problem for cat breeders. The company estimates the market size at $3 billion. It is estimated that PetNovations raised $10 million from Israel Healthcare Ventures and Moshe Mizrahi.

Diagnostic Technologies (DTL) - Developed a test for pregnant women that identifies the qualitative determination of placental tissue protein in maternal serum, preventing premature delivery and death. The Pregnancy at Risk Detection Test kit is now in clinical trials in the US. DTL was founded in 1994 and has raised $7 million to date from several goverment funds including Teuza Fund and the Technion Institute.

Enzymotec - this biotechnology company focuses on food supplements. Started in 1998, Enzymotec sells its food supplements for baby nutrition, heart health and brain health. The company is profitable. To date, Enzymotec has raised $15 million from the Chief Scientist office, private investors, Gilam Technologies, the BIRD fund, Ofer High Tech and Millenium Materials.

Communications:

Red Bend Software - develops technology that enable cell phone manufacturers to perform software updates remotely using FOTA technology. Red Bend recently raised a fourth round of $10 million, to increase its penetration to other wireless products such as Broadband PC and the Wimax market. Red Bend’s primary products are Vcurrent and vRapid Mobile. Investors include Pitango, Graylock, Carmel, Coral and Poalim Ventures. The company has raised $36 million to date.

BroadLight - a fabless semiconductor company, founded in 2000. Among other products Broadlight’s Residential Gateway (RG) connects the digital home to the service
provider’s network and facilitates the feature rich and secure IP
services.

Techtium - this veteran company was started in 1995, with a goal of solving one of the laptop’s main challenges - the battery. Techtim has developed a chip that helps manage the lifetime of the computer’s battery and provides backup until the computer reaches an electricity source. The company’s main product, BackUPower provides back up energy to mobile devices.

Software and Internet:

WeFi - developed downloadable software that automatically detects and qualifies all WiFi access points within range
and connects users to the spot with the best Internet connection. Wefi was co-founded by two brothers Shimon and Tamir Scherzer. The company has raised $7.5 million from Lighspeed, Pitango, Gemini and Yossi Vardi.

Gizmoz -probably the only web 2.0 company on this list, Gizmoz develops 3D animated avatars, served for messaging in websites, social networks and mobile phones. Gizmoz enables users to personalize their own avatars by uploading an image and transforming it into a rich-expression character. Initial success was driven by the popularity of the product on MySpace. Led by CEO Eyal Gever, Gizmoz has raised $16.5 million to date, from private investors and several vc funds: Docomo, Benchmark, Columbia Capital.

WorkLight - We recently covered WorkLights recent founding round in depth on VC Cafe. In the past three years, the company has been working on Enterprise 2.0: secured web 2.0 tools for business purposes in the corporate environment. Genesis, Index, Pitango and Shlomo Karmer invested a total of $17 million so far.

60 years ago, no one would have conceived that Israeli companies will get so far in their level of sophistication, market share and impact on so many industries. In merely 20 years Israel has switched from being the largest exporter of Oranges, to being a leader in semiconductors, biotech and clean technologies. I’ll take the opportunity to wish Israel a happy 60th birthday and many more to come.

Popularity: 42% [?]

May 6, 2008 | 1 Comment

Filed Under BroadLight, Delver, Enzymotec, Genesis, IVA, Pet Novations, Pitango, Red Bend, Techtium, WeFi, WorkLight, carmel, gemini, gizmoz, modu

Quick! Tickets Relased For MashBash Tel Aviv

Before I go any further - grab your free ticket to Mashbash Tel Aviv’s open bar free party on June 11th while they are still available:

Click here for the ticket sale. 500 tickets disappeared after less then ten hours. 100 more will be released in the next weeks.

Now that we got that out of the way, I can tell you that VC Cafe is officially part of the Israel Media Tour. You can find more details on the party and the media tour at the official MashBash Tel Aviv page. During the Israel Media Tour at least ten Israeli startups will be covered by Mashable, The Marker and Israel’s leading tech blogs, including your very own, VC Cafe.

This is a great initiative by Mashable, and positive exposure to the early stage startups that participate in the tour. Stay tuned for more updates.

Popularity: 22% [?]

May 6, 2008 | Leave a Comment

Filed Under Israel, mashbash tel aviv

Investors Believe In Iamba Networks, Add $7 Million Investment

Iamba networks has secured a $7 million round from previous investors Pitango Venture Capital, Cedar Fund, Giza Venture Fund and UK-based Kreos Capital. The company develops chips for telecommunications, specifically Gigabit Passive Optical Networking (GPON), a technology that aims to replace DSL.

I admittedly don’t know too much about this technology, so I did some research online. It turns out that telcom carrriers face bandwidth problems due to the use of the old DSL networks which are based on copper. Now, carriers are moving to passive optical network (PON) technology, that facilitate “delivery of new bandwidth-intensive “triple play” (voice/VoIP, Internet and television/video) services over highly cost effective passive optical networks directly to the homes and business locations of individual subscribers“.

According to the official press release, iamba Networks will use the funding to enhance its product portfolio , increase the Sales and Customer Support teams, and expand its reach to new regions.

Ori Israeli, Managing Director of Giza Venture Capital said:

“Over the last six months iamba has demonstrated significant traction in the global GPON market as demonstrated by its recent successes in Korea, where a large volume of GPON CPEs will be produced and deployed. We believe the company’s product line is well positioned to continue securing strategic design wins worldwide”

Founded in 2000, the company is headquartered in Cupertino, CA with an R&D center in Israel. The company is led by CEO Moshe Nattiv and founder Amit Preuss who serves as the GM in Israel. Iamba brought its first GPON solution to the public marketplace in 2007 and secured a lead in the Asian market and has recently announced plans to expand its precense in Europe.

Popularity: 25% [?]

May 6, 2008 | Leave a Comment

Filed Under Pitango, cedar fund, giza, iamba, kreos capital

Gaming Chips: PrimeSense Closes $20M in Round B

Canaan Partners led the $20.4 million funding round of Israeli startup Prime Sense Inc. Gemini Israel Funds and Genesis Partners, prior investors in PrimeSense, also participated in this second round. I first wrote about PrimeSense on VC Cafe when they presented at CES this January.

PrimeSense is in fact a gaming company, creating technology that enables consumer electronic devices understand the world in 3D, the way humans do. PrimeSense’s patented technology enables some really cool applications, inspired by the success of the Nintendo Wii and the iPod. For example:

* Gaming - Similar to 3DV Systems, PrimeSense removes the need for a joystick to play video games in front of the TV. Imagine a the next generation Wii game, where the player’s body IS the joystick: kicking, shooting fireballs and using hand movements to cast a spell on their opponent.

* Consumer Electronics- PrimeSense brings 3D to digital devices, removing the need for a mouse or a keyboard through touch-screen menu interaction.

* Video Communication - virtual drawing boards, background replacement and more.

The company is led by president Aviad Maizels, CTO Alexander Shpunt, Ophir Sharon, Tamir Berliner and CEO Inon Bracha, who was the former CEO of the DSP Group. In a comment to Globes Bracha said:

Prime Sense was founded in 2005 by a team of entrepreneurs who are self-proclaimed gamers who were looking to improve the user experience and make gaming controls more intuitive.

Bracha added to TheMarker that PrimeSense has tough competition out there including Israel’s 3DV Systems, who is fighting for the same turf developing gaming applications and Canasta Inc, who patented a virtual input device such as an image of a keyboard.

To date, the company has raised $29.4 million, last round of $9 million was raised in August 2006. Recently,PrimeSense has reached a big agreement with a consumer elecronics manufacturer, and several applications are scheduled to come out in the near future.

Popularity: 26% [?]

May 5, 2008 | Leave a Comment

Filed Under 3dv systems, Canaan Partners, Genesis Partners, Primesense, gemini

Israel Cleantech Ventures Exceeds Funding Expectations, Raises $75M

Today (May 5th), Israel Cleantech Ventures (ICV) announced today that it reached a final close of $75 million for its first fund, significantly exceeding expectations from its original target of $60M. ICV will invest in Israeli companies (or Israel-realted) in renewable energy, water purification, energy efficiency and clean technology.

ICV is the first Israeli cleantech-focused investment fund. The fund is backed by high profile institutional investors and family funds in Europe, the US and Israel, including US-based investment bank Piper Jaffray and Netherlands-based asset manager Robeco Private Equity.

Established in 2006, ICV is managed by a team of veterans: Jack Levy, Meir Ukeles and Glen Schwaber. The fund has made seven investments to date in various areas of clean tech:

Aqwise (waste water treatment)
CellEra (fuel cells)
Citrine Renewable Energy (landfill biogas treatment)
Emefcy (energy production from wastewater)
Metrolight (energy efficient lighting)
Project Better Place (electric vehicle infrastructure)
Pythagoras Solar (solar energy)

More investments are expected in the near term according to ICV partner Jack Levy. In the official press release, Danny Zouber, principal at Piper Jaffray Private Capital said:

“As we completed the diversification for the first U.S.-based cleantech fund of funds, it was important for us to have exposure to the leading-edge innovation in alternative energy, advanced materials and water technologies taking place in Israel. Israel Cleantech Ventures offers our investors a level of expertise and experience in those sectors that will enhance our overall portfolio.”

Last month, ICV was ranked among the top five international cleantech investors, with $16.6 million invested in Q4 2007. The same quarter was also Israel’s highest level of investment in cleantech ever, with $132 million raised across 9 companies. Find out more about Clean Tech Investing in Israel in Jonathan Shappira’s blog.

Popularity: 26% [?]

May 5, 2008 | Leave a Comment

Filed Under ICV, Israel, cleantech

MediaBoost is Seeking A Capital Boost

I was really happy to find out that MediaBoost raised $1 Million from Teuza fund last week as part of a larger round that the company is looking to raise. The fund, a Fairchild Technology venture, had already invested $500K in MediaBoost last year, and judging by the prospects for the company, Teuza’s investment is a safe one. Uri Shtrichtman, one of MediaBoost’s co-founders was kind enough to walk me through the company’s products back in January, and I was impressed with the company’s ability to increase ROI by decreasing ad spend and increasing returns simultaneously.

MediaBoost takes an algorithmic approach to ad spend optimization, automatic the process of keyword bidding for the advertiser. Rather than using rules of thumb, or trying to put guesstimates on the bid price for a certain keyboard, MediaBoost’s flagship product, AdBooster, will do it for you. How does it work? Below is a quick explanation, learn more by taking the AdBooster tour.

The bid prices on a certain keyword or phrase are dynamic, so MediaBoost constantly repeats this process to keep optimizing the account is kept optimized to the best available profit. In addition, AdBooster is a “learning system”, so it accumulates additional information and achieves more precise modeling over time. MediaBoost offers a 30 day free trial so you might want to consider trying it.

From what Uri explained to me, being ranked first for a keyword does not necessarily yield the best results for the advertiser. For example, while younger users need immediate satisfaction and therefore click on the first result or ad presented to them, older users rather research and scroll down to the bottom of the page. Therefore, depending on the campaign, the cost of bidding for a keyword could dramatically decrease with a little strategy.

MediaBoost uses a service model, in which advertisers enjoy a short period of hand holding, after which the process becomes almost completely automated. The business model is simple - MediaBoost takes a percentage of the top, from the advertiser’s budget. In my opinion, this model is not ideal since it doesn’t ‘motivate’ MediaBoost to get the best results - Instead, they should consider a revenue share from the incremental revenue created by implementing the AdBooster.

MediaBoost was founded in 2005 by CEO Alon Matas, formerly co-founder of Internet enterprise incubator Compile Ltd. and Hevre (the Israeli version of Classmates.com), and VP business development Uri Shtrichman. The largest client is currently ValueClick.

Popularity: 29% [?]

May 5, 2008 | Leave a Comment

Filed Under Israel, advertising, mediaboost, tauza

AdYouNet Raised $1M, Building Advertising CRM System

Last week, stealth online advertising start-up AdYouNet Technologies (formerly known as Webbi) has raised $1 million from its current investors Xenia Venture Capital (TASE:XENA) and NetService Ventures. This is the company’s A round following a $400,000 invested last summer by International Venture Fund (IVF) of the US.

There’s not much out there about AdYoumNet besides the fact that it’s is developing an online advertising distributed ad server platform. AdYouNet claims to have patented technology, which will enable enterprises to target internet advertising campaigns just to their customers, wherever they happen to be on the web. Company’s like Meraki are already doing a similar implementation, through their control of the browser in free wifi networks.

According to Globes, AdYouNet’s ad platform is a CRM system that enables “one-to-one identification of targeted users to deliver a tailored advertisement campaign”. The company was founded in 2007 by CEO Ilan Zorman and VP Media Sagee Schnaittacher, who was CEO of Ventiv Media, a small Israel-based online ad representation firm. The company is based in Tel Aviv and has six employees.

Popularity: 30% [?]

May 5, 2008 | Leave a Comment

Filed Under AdYouNet, Netservice Ventures, Xenia Venture Capital

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