Blackberry Buys Israeli Startup for $100m

WatchDox will become Canadian company’s first Israeli R&D center.

Inbal Orpaz
Reuters
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WatchDox CEO Moti Rafalin.
WatchDox CEO Moti Rafalin.Credit: Nir Kedar
Inbal Orpaz
Reuters

BlackBerry, the Canadian company whose eponymous devices once dominated the smartphone market, said Tuesday it was acquiring the Israeli-U.S. startup WatchDox in a bid to further bolster its security credentials.

BlackBerry didn’t say how much it paid for WatchDox, which makes software to secure files, but sources said it was approximately $100 million. Blackberry said it would retain 100 WatchDox employees and turn the startup’s Petah Tikva research and development offices into an Israeli R&D center dedicated to security applications.

The WatchDox software, which is being used by some of the world’s largest federal agencies, private equity firms and a slew of major Hollywood studios, gives clients full visibility and control over how their files are edited, copied, printed or forwarded.

It also gives administrators the ability to lock or to remove access to files compromised in a data breach. With a customer base of lawyers and accountants working with sensitive and confidential papers, BlackBerry is expected to use the technology to secure documents on its devices

WatchDox, which has headquarters in Palo Alto, California, was formed seven years ago by Moti Rafalin, now the company’s CEO, together with Noam Livnat. Over the years it raised $35 million from investors, including $10 million from the Shlomo Kramer, Mickey Boodaei and Rakesh Loonkar.

In 2012, the company acquired InstallFree, an Israeli startup that gave it access to mobile applications, enabling users of its software to edit documents jointly and in real time on every platform including Apple’s iOS, Blackberry and Android.

The three have become major investors in Israeli cyber security. Kramer, a co-founder of Check Point Software Technologies, earned about $50 million from investments in three startup exits – WatchDox, LacoonSecurity and Hyperwise.

Other WatchDox investors include Blackstone, Shasta Ventures and Millenium Technology Value Partners, all from the United States, and the Israeli venture capital fund Gemini.

As for BlackBerry, this year CEO John Chen said he saw part of the company’s targeted software revenue growth in the current fiscal year coming from acquisitions of companies that will allow it to sell more value-added services.

“This acquisition represents another key step forward as we transition BlackBerry into the premier platform for secure mobile communications software and applications, supporting all devices and operating systems,” Chen said on Tuesday.

The Waterloo, Ontario-based BlackBerry made a couple of strategic acquisitions last year that have allowed it to sell such value-added services.

In July it announced it was buying Secusmart, a privately-held German firm that specializes in voice and data encryption used by the German government and other customers. In September, it acquired Movirtu, a British-based tech startup whose software allows users to have two phone numbers on the same device with a single SIM card.

The purchases have helped BlackBerry ramp up its portfolio of services that cater to the needs of its core base of clients, such as corporations and government agencies.

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