Facebook surprised with its first acquisition in Israel today (and its second acquisition outside of the US), with the announcement that it is buying Israeli startup Snaptu (previously known as Moblica) for an estimated $60-70 million. Founded in 2007 by Ron Makavy, Micha Berdichevsky, and Barak Naveh, Snaptu raised a total of $9 million in three rounds: $3 million from Carmel Ventures, $5 million a year ago (March 2010) from Sequoia and $1 million from private investors, including Spotlab, an angel fund operated by former Israeli MP Neomi Blumental. According to TheMarker (Hebrew), Sequoia will be making a six time multiple on its investment. Snaptu announced the deal on its blog, but didn’t confirm the terms of the deal. The acquisition is supposed to close in a few weeks.
Snaptu is a fast-growing application for feature-phones (or not-so-smart phones) which serves as a mini-app store for WAP-Internet phones. Users who install Snaptu get a few basic ‘mini-apps’ by default (such as Facebook, RSS reader, Twitter, Picasa, weather, news, etc) and have the ability to install additional widgets. In January, Snaptu collaborated with Facbeook on the launch of Facebook for Feature Phones and last week, Snaptu announced a similar partnership with LinkedIn. These two deals are significant, and suggest that Facebook didn’t just buy an app – Snaptu is a mobile platform and a distribution channel for emerging markets with low smartphone penetration, where the users use their mobile phones as their main access device to the Internet.
One of the differentiators of Snaptu, is that the company chose the feature-phone market as its core audience. The application works on 2,500 device models and is available to 80% of the world’s phones. with less competition and a large market, Snaptu has been able to generate revenues through mobile ads and operated a revenue share with its partners. As of today, Snaptu has 30 million installs and is distributed on the app stores of Nokia (Ovi), Vodafone, Airtel, Blackberry, Sony Ericcson and Getjar, the largest independent application store.
According to Snaptu’s company profile on LinkedIn, it employs 24 people across its three offices: Tel Aviv, the valley and London. Unlike its normal ‘relocation’ of acquired companies to Palo Alto, Facebook plans to maintain Snaptu’s development office in Israel, which suggests that Facbeook is planning to start a development center in Israel (following the footsteps of many other large technology companies). If that’s the case, Facbeook’s second acquisition outside of the US begs the question – “Who’s next in the Israeli Dev center?” Facebook was rumored to have courted Israeli startup Face.com in the past, which enables auto tagging of your pictures based on pattern recognition, but the latter has declined the offer.
Below is a video tour of Snaptu, in case you’re one of the 25% who does have a smart phone: