Even as the other denizens of Israel’s Download Valley are reporting falling revenues and a cloudy future, TheMarker has learned that closely held IronSource has raised $85 million from a group of 10 investors.
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The fundraising round values the online software distributor at $800 million. By comparison, Perion Network, the price of whose Tel Aviv Stock Exchange-traded shares plunged 25% last week, now has a market capitalization of $480 million.
The biggest investor in the fundraising round, which was arranged by the Morgan Stanley and JPMorgan Chase investment banks, is The Disruptive Fund, led by serial entrepreneur Tal Barnoach, TheMarker has learned.
The fund invested $15 million of the $40 million it has under management, with the rest coming from a group of American and Chinese investors, sources told TheMarker.
Carmel Ventures, which held a 15% stake in IronSource, opted not to join the current round. With the fundraising round completed, IronSource is likely to conduct an initial public offering in the United States next year.
IronSource declined to respond to the report, which comes some six months after IronSource called off a merger with another Download Valley company, Babylon, after the latter lost a key contract with the search engine Google.
Download Valley — the cluster of companies whose business model is to entice users to download free software — had been going through a rough patch in the last several months. Last week, Perion and Babylon reported bad news. Baylon said it would five back shareholders some 125 million shekels ($36 million) as a dividend because it couldn’t see how to justifiably spend the money on acquisitions or research and development.
Perion, meanwhile, slashed its outlook for the rest of 2014 and said it is shifting its focus away from desktop computers to the mobile market.
IronSource, whose CEO Tomer Bar-Zeev is also a major shareholder, has been profitable and cash-flow positive, even distributing dividends. Last year, it had revenues of some $200 million, yielding an operating margin of 25%. It employs about 200 people at its offices on Tel Aviv’s Lillienblum Street.
Formed in 2008 by Bar-Zeev and brothers Eyal and Roi Milrad, its main product is installation software used by many of the world’s most popular downloading websites. It flagship product, the InstallCore platform, handles over 100 million software installs per month, shortening download times and providing users with suggestions for software their computers may lack.
It has enabled IronSource to offer distribution and installation services to other software developers.