Microsoft buys Gteko for $100-120 million
Startup makes automated technical support for computers
With Lior Haner
Microsoft is making another Israeli acquisition, purchasing Gteko for between $100 million and $120 million.
The official announcement of the deal, the first exit by an Israeli company in the Hebrew year 5766, which started this past weekend, is expected today or tomorrow. In May, the U.S. software giant purchased Whale Communications for $75 million.
Gteko was founded in 1992 by Dr. Joshua ("Shuki") Glazer, the company's CEO. It specializes in automated technical support for personal computers and electronic end-user devices.
Gteko's solutions help PC and peripherals manufacturers, Internet service providers and software vendors with large technical support centers to improve service quality and reduce call-center costs. Gteko's software also provides the end user with personalized content to help solve problems alone.
In 2004, the company raised $12 million, co-led by Pitango Venture Capital and the Intel Digital Home Fund, in order to develop and deploy new digital home technology products.
According to data from IVC-Online, Gteko has raised a total of $13 million to date, which means that investors will be seeing a return of about 900%. This will mark Pitango's second successful exit within three months, following the purchase of ColBar by Johnson & Johnson for about $150 million.
Yossi Vardi, a co-founder of ICQ, was an early investor in Gteko, getting in the first round of fundraising together with NEC Europe, the Office of the Chief Scientist and additional private investors.
Gteko's client base includes major companies such as Cisco-Linksys, HP and Canon, through which the Israeli startup has installed its software in tens of millions of computers throughout the world.
The Ra'anana-based company has about 150 employees. A few months ago, Gteko made the Red Herring 100 Europe list of promising startups in the Middle East and Eastern Europe, one of 17 Israeli companies to make the cut.
In April, Microsoft announced its intention to expand its activities in Israel. The company already has a research and development center in Haifa that focuses on data security solutions and employs about 200 people, and a new center of about the same size is being built in the center of the country. Moshe Lichtman, one of the most senior Israelis working in Microsoft's Seattle headquarters, recently returned to Israel as president of R&D for the company's local operations.
"By the end of the decade, Microsoft will significantly expand its operations in the consumer sector, to which end advanced support solutions are required," Lichtman said yesterday. "Gteko's leadership in providing simple solutions to a wide range of personal computer problems made this a particularly attractive opportunity for Microsoft."
"Joining forces with Gteko is yet another building block in the expansion of our technological operations in Israel," Lichtman added.
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