Intel announced today that it has agreed to buy Israeli driverless technology firm Mobileye for $15.3 billion, the largest ever acquisition of an Israeli high-tech company. But besides the great outcome for Mobileye’s co-founders and early investors and the obvious benefits to the local tech scene, this deal finally breaks the myth that Israeli startups can’t scale.
In the past few years several Israeli startups have become global category leaders and have built immense equity value for their shareholders: Israeli DIY website building company Wix.com went public in 2013, and has kept executing flawlessly ever since. Wix’s stock price kept rising and the company is now valued at almost $3 Billion. Waze, an Israeli-based traffic navigation app, was acquired by Google in 2013 for more than $1 Billion and is now used by 80 million active users a month. Other notable recent examples include cyber security CyberArk which trades at ~$1.7 Billion market cap, Playtika’s $4.4 billion acquisition by a Chinese group (though from a previous acquirer so not exactly the same), and others.
And the truth is that there are many more in the pipeline. Growth investing which was almost non-existent in Israel only several years ago has picked up tremendously. The sources of growth capital now include new local growth funds and many global VCs which are investing large amounts capital in Israeli startups:
While obviously not all these companies will succeed, several of them are strong candidates to become $1 Billion or more businesses. It is now fair to say that startup nation has finally matured — the common story about Israeli entrepreneurs and investors rushing to sell their companies as they get the first bid has become just a myth.