Facebook Buys Israeli Startup Onavo for More Than $150 Million

Under deal, Facebook agrees, for the first time, to run an R&D center in Israel.

Facebook, the world’s largest social network, has signed an agreement to acquire the Israeli startup Onavo for more than $150 million. Onavo, the developer of an award-winning mobile utility app and the company behind Onavo Insights, made the announcement Monday morning to its employees and published a notice on its blog.

According to the agreement, Onavo will keep its Israeli offices, with their 30 employees, making this the first time that Facebook will run a research and development center here. When Facebook acquired Snaptu and Face.com, it transferred the employees to its own offices in the Silicon Valley. Facebook will also be keeping the products that Onavo developed.

Since Onavo was established, it raised $13 million from a series of leading investors. Li Ka-shing’s Horizons Ventures, Sequoia Capital, Motorola Mobility Ventures and the Israeli venture-capital fund, Magma Venture Partners. Horizons Ventures and Magma Venture Partners are two of the venture-capital funds that also invested in Waze, which was recently acquired by Google for $1 billion. Onavo has 40 employees, 30 of whom work in Israel.

Onavo burst onto the scene as a company that helped users reduce their mobile data costs. In April 2011, it launched Onavo Extend, an application that kept track of megabyte-guzzling apps and compressed data, lowering surfing costs by up to 80 percent. Onavo Extend was launched at a time when cellular surfing packages were limited in size and data use was costly. It was particularly useful to people who took their smartphones abroad and wanted to keep high roaming costs down. In fact, the idea behind Onavo was conceived when the brother of founder and CEO Guy Rosen got an enormous cellular phone bill after a trip to Barcelona.

The communications technology Onavo developed matched the experience of its founders, Rosen and Roi Tiger, had gained while serving in the Israeli army’s intelligence unit, Unit 8200. During installation, the cellular device connects to a cloud-based compression service that Onavo developed. Once the app has been installed, every time the user consumes content, the content is compressed in the cloud and sent to the user’s device in compressed, “lighter” form — allowing end-users to use up to five times more data and still remain within the limits of their package.

The application, which has been installed by millions of users, may be downloaded for free. Onavo’s officials say they are interested in gathering a large number of users who will become “addicted” to the app, and later will charge a monthly subscription fee.

In February, the company unveiled Onavo Insights, a service that shows usage patterns of smartphone applications, for companies that deal in mobile content such as game developers, application developers, advertising companies and investment firms. It created a database of information collected anonymously from users who installed the applications on their devices and conserved their data usage.

Onavo Insights shows customer data such as the percentage of market penetration in the United States smartphone market, a general ranking of application popularity, competing applications, retention rate and engagement. The free service includes information about iPhone applications in the United States, while the paid service includes information about iOS and Android applications in dozens of countries.

Rosen says the companies that provide information about the number of downloads do not answer the question of how many people really use the application — information that Onavo can provide thanks to the service it provides to cellphone owners.

Onavo also offers premium modules, geared toward advertisers and mobile software developers, that provide real user engagement data on competing applications, effectiveness indices for cellular campaigns and detailed data on users of cellular devices.

The average cost for a subscription to the Onavo Insights paid service is roughly $100,000 per year.

Meir Pinto