Russian Internet Giant Yandex Acquiring Israeli Geolocation Startup KitLocate

No selling figure cited, but estimated to run into tens of millions of dollars.

Yandex, a Russian Internet company that operates the country’s most popular search engine, said on Tuesday that it was acquiring Israel’s KitLocate and plans to turn the startup into the basis a research and development center for an undisclosed price.

KitLocate has developed geolocation technology that feeds realtime information from a mobile device about where the user is located, enabling nearby retailers to advertise their products and services. Its GPS technology can be also be used for other purposes, such as enabling parents to keep track of their children’s whereabouts.

Thanks to proprietary algorithms, the KitLocate app eats up less battery power than similar apps because it needs to update the user’s location less frequently.

“Yandex will distribute the technology on the international market and also use KitLocate to improve its own services, including in the personalization of mobile search and targeted advertising,” the Russian company said in a statement.

While the terms of the acquisition were not been disclosed, industry sources said that the Russian firm likely paid in the tens of millions of dollars for the Herzliya-based startup. The TechCrunch technology news site estimated Yandex paid “several million euros” for the startup.

Yandex told TechCrunch that it would hire more engineers and mobile quality assurance workers for the office on top of KitLocate’s current staff of eight.
Founded in 2011, KitLocate has raised $700,000 in capital from Aviad Eyal’s Entrée Capital as well as from private investors Yigal Yaacobi, who is the founder of publicly traded Allot Communications; Errol Ginsberg and Laurent Asscher. Its founders are CEO Omri Moran; Ron Miller, vice president for development; and Yoav Cafri, chief technology officer.

KitLocate’s customers include the Israeli arm of the credit card company MasterCard, the U.S. retailer Sears and Pango, the Israeli parking app startup, which uses it to confirm that a user has left the parking space he has paid for.

In December 2012, KitLocate won a $25,000 innovation prize from MasterCard and the Israel Advanced Technology Industries trade association. It then became part of Genesis Partners’ The Junction program for entrepreneurs and Microsoft’s Accelerator program for startups.

Although Russian companies have not been very active in the Israeli high-tech scene, Tuesday’s acquisition was not the first in Israel for Yandex, which is on the U.S. Nasdaq stock market at a market capitalization of $10.2 billion and, according to LiveInternet, generated 62% of all search traffic in Russia as of the end of last year, making it one the world’s top five search engines.

The Russian company took a stake in the Israeli face recognition technology startup Face.com in 2010 but sold it when Facebook acquired the company two years later. In 2012, it invested in Haifa-based GBooking.

Other Russian Internet companies active in Israel include Mail.ru, which purchased Mirabilis’ ICQ instant messaging software from AOL. Although it closed AOL’s development center in Israel, it maintains strategic investment and cooperative agreements with Israeli firms.

Bloomberg