Tech Nation / Tel Aviv Named World’s No. 5 Startup Ecosystem

Israel suffers personnel and capital shortfalls; Viber buys Peernext; IAI unveils robot system; Sapiens buys Polish software firm.

Dan Keinan

Tel Aviv ranks fifth in the world for its startup ecosystem and Jerusalem has made it into the top 50 for the first time in the Global Startup Ecosystem Ranking released this week by Compass.

The news wasn’t all good as Tel Aviv fell three places from its place in Compass’ 2012 survey, which the report said was due to methodology changes. “Tel Aviv is still an exceptionally strong startup ecosystem providing entrepreneurs with a well-balanced set of quality resources, which have been refined throughout the last few decades,” Compass said.

Moreover, the city made it into the list of five global tech centers boasting “hyper-growth” in the value of exits over the last three years, with values jumping 2.9 times. Tel Aviv accounted for 6.5% of the value of all startup exits, Compass said, making it No. 4 in the world. No. 1 in the survey was Silicon Valley, followed by New York, Los Angeles and Boston. (Inbal Orpaz)

D&B: Startup Nation suffers personnel, capital shortfalls

Israel is home to an impressive 6,900 high-tech companies, 79% of them startups, but the industry faces a shortage of skilled manpower and local investors, the business information company Dun & Bradstreet said in a report this week. While 78% of the startups have won outside investment, only 362 employ more than 100 people. Compared to the United States, the average Israeli company is about as old (five years) but has far fewer employees (five versus 73) and raises less capital in each funding round ($6 million versus $16.3 million).

High-tech employment in Israel has grown by 10,000 a year, but could be growing by 12,000 except for the shortage of trained personnel, D&B said. Foreign investors, meanwhile, account for a growing share of startup investment in Israel. “The shortage of local capital is causing startup companies to move to other countries, mainly the U.S.,” D&B said. 

Viber buys Peernext to expand social gaming

Viber, the Israeli messaging app maker acquired last year by Japan’s Rakuten for $900 million, is buying the Israeli startup Nextpeer for $9 million. Viber said the acquisition, its first, is aimed at expanding its social games products, which it began offering its 600 million users as Viber Games at the end of last year. Nextpeer, which was formed four years ago by CEO Shai Magzimof, Daniel Shir and Itamar Mula, lets mobile-game developers add multiplayer features and social functions. Peernext had raised $2.9 million from Our Crowd and Wolfson Group before it was sold and counts 8,000 registered users for its service. 

IAI unveils robot system for ports

Israel Aerospace Industries has introduced a system for moving cargo containers around ports more quickly and efficiently, the state-owned company said Wednesday. The Robotic Container Management & Storage System moves the giant containers on low-cost robotics with a command and control center using algorithms developed by IAI providing constant supervision augmented by people. Containers can be loaded and unloaded 1.5 times faster than they are now and the containers don’t have to be constantly rearranged to access them, IAI said. “This is a revolutionary system that will change the perception of transportation and storage methods used around the world,” said Ran Braier, head of commercial robotics at IAI. The system joins IAI’s other robot offerings, including TaxiBot, a semi-robotic pilot-controlled vehicle. 

Sapiens buys Polish software firm

Sapiens, which makes software for the insurance industry, said this week it was buying Poland’s Insseco from Asseco Poland, its controlling shareholder, reportedly for $9.1 million. With a team of 140 insurance professionals, Insseco focuses on life, pension, property and casualty insurance, and counts leading Polish insurers as customers. “With a larger and more geographically dispersed professional services team, Sapiens continues to invest in getting closer to its customer,” Sapiens said. “This acquisition grants Sapiens entry into a new market, Poland, and expands the company’s solid footprint in Europe. In March, Sapiens acquired Ibexi Solutions, an India-based provider of insurance business and technology in the Asia-Pacific region.