Yahoo Buys Tel Aviv Startup ClarityRay in Its Second Israeli Acquisition in a Month

Although the fraud-prevention startup is still small, with just six employees including the founders, the exit is expected to generate a handsome profit for everyone involved.

The Internet content and search giant Yahoo has acquired ClarityRay, a Tel Aviv-based startup whose software enables content publishers to circumvent ad-blocking programs. Ad blockers are popular with Internet users who don’t want to be distracted while reading online, but they deprive content providers of all-important advertising revenue.

Last year the company switched its emphasis to focus on ad security and fraud detection, including so-called ad malware that interferes with a computer’s normal operation. The terms of the acquisition were not announced, but it is thought that Yahoo paid between $15 million and $25 million. ClarityRay is expected to maintain operations in Israel. Its clients include a number of leading content websites and Fortune 500 companies.

Yahoo has been snapping up technology companies on a regular basis. ClarityRay is Yahoo’s second recent acquisition of an Israeli company, after it announced in July the purchase of streaming video company RayV. Yahoo is headquartered in Sunnyvale, California.

ClarityRay was founded in 2012 by CEO Ido Yablonka, Chief Technology Officer Guy Pitelko and VP for research and development Vadim Zak.

In May 2012 it raised $500,000 in a round led by chairman Saar Wilf, the founder of Fraud Sciences.

Although ClarityRay is still small, with just six employees including the founders, the exit is expected to generate a handsome profit for everyone involved. The company became profitable last year. For Wilf, this is his first exit as an investor.

“Joining Yahoo now will allow us to make use of that momentum and take the next steps (or rather, leaps) towards that vision, and we couldn’t be more excited,” the company said in a statement released on Friday. “This once-in-a-lifetime opportunity enables the mass scaling of our technology, impact and ideas to the absolute forefront of our field, while working with an amazing team who shares our passion. We’re proud to call Yahoo ‘home’.”

The initial technology that ClarityRay developed was designed to help Internet content providers deal with ad blockers that were depriving them of advertising revenues. In 2012, the company reported that on average 9.3% of Internet ads in the United States, Europe and Israel were being blocked. That threatened to undermine websites’ business model: offering content at no cost to users, in exchange for advertising on the page or in popup ads.

ClarityRay developed a two-pronged solution, offering Internet surfers ad-blocking software and Internet publishers the technology to provide ad-free surfing to paid subscribers to their websites. It later shifted its focus to advertising fraud and malware detection.