Israeli startup Wix Raises $40 Million, Wants to Become a Large Company in Israel

We rarely hear of such a large round amongst Internet startups in Israel, which is why Wix’s founding round is particularly interesting. Wix, the Israel-based flash website platform, has announced a D round of $40 million. The new investors in the round are Insight Venture Partners and DAG ventures who joined previous investors Benchmark Capital, Bessemer Venture Partners and Mangrove Capital Partners that also participated in the round. With $61 million in funding to date, Wix should now be equipped to build a significant size company in Israel, as opposed to the usual $20-$120 million exits that we’re so used to see.

TheMarker reports that Wix has turned down a $200 million acquisition offer from one of the largest technology companies this year. When asked why they’ve turned it down, Giora (Gig) Kaplan, one of Wix’s founders replied that his vision is to do a revolution and go where Israeli startups haven’t go before – grow a large company. Israeli startup

Today, Wix’s revenue is estimated at a few dozen million USD and the company has 9 million registered users, who developed 8.5 million sites. Last year the company doubled in size, and opened new offices in the West coast, in addition to its New York and Tel Aviv offices. Wix currently has 185 employees and plans to recruit an additional 100 in 2011. The goal? Potentially an IPO in 2012. That would require $100 million in revenue, which is NASDAQ’s minimum threshold for IPO.

Wix’s product has also developed significantly since it started in 2006. In an article we published on VC Cafe in October 2007, “Goodbye HTML, Hello Flash“, the company’s main product was simple flash sites that required no programming skills. Today, Wix has expanded into Facebook pages and mobile applications, and has started offering users a “shopping cart” for their e-commerce websites.

When asked who would Wix compare itself to, Avishai Abrahami (Wix’s co-founder), says that similar to blogging platforms such as WordPress, Wix helps users get online presence with their own website using a freemium model. The basic page is free, but users can pay for premium services such as a custom URL, more storage and premium support. This need for web-presence, he predicts, will continue growing in the coming years. It’s worth mentioning that platforms like Sprout and Yola provide similar services as well, but target more professional users.

So far so good, however, it remains to be seen how would Wix fare with the potential exodus from Flash into HTML5 and the barrage of new services offering free websites to users (potentially churning their paying customers).With one of the most significant founding rounds in the Israeli startup scene in the past year, Wix may have also scared off potential acquirers in an uncertain IPO market.

Wix intends to use the new funding for new social and mobile products, and who knows, perhaps also a smal acquisition. With plenty of money in the bank, Wix has the potential to be a serious new entrant on the short list of large consumer Internet startups in Israel.

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Eze Vidra

General Partner, Google Ventures at Google
Eze is a General Partner at Google Ventures Europe. Before joining GV, Eze started Campus London, Google's first physical hub for startups, and led Google for Entrepreneurs in Europe. He's an experienced product manager and startup mentor. In 2012 Eze founded Techbikers, a non-for profit supporting children education in developing countries.
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