Israeli Start-up Waze Draws Investment From Chinese Billionaire

Hong Kong's Li Ka-shing, greater China's richest man, invests in Israeli navigation technology start-up.

A month after announcing his first investment in an Israeli startup, Hong Kong's Li Ka-shing yesterday chose to put big money into Israeli navigation technology startup Waze. Ka-shing, greater China's richest man, is investing in the Israeli companies through his investments arm Horizons Ventures.

Waze's free mobile application guides drivers to their destination by voice and offers data on traffic conditions, as supplied by users. The goal is to shepherd its users by optimal routes. The company has formed a social network where drivers interact, reporting on road conditions.

Li Ka Shing - Bloomberg

Waze is raising $30 million from Horizons and Kleiner Perkins Caufield & Byers' Digital Growth Fund. It is one of the biggest financing rounds by an Israeli startup this year.

The company's existing shareholders include Microsoft and Qualcomm, which invested in previous funding rounds.

Horizons' first investment in Israel was in the video-editing startup Magisto. In the past Ka-shing's fund has invested in Google, a venture it entered together with venture capital fund Sequoia in 1999. Horizons has also put money into personal-news disseminator Twitter, Zynga ("connecting the world through games" ) and group buying site Groupon.

Ka-shing evidently believes in Internet: his venture capital fund also owns an 0.8% stake in Facebook, bought at the time for $120 million, and invested $50 million in online music company Spotify. Horizons also invested in the applications fund Siri, which was bought by Apple.

Ka-shing has had previous ventures into Israeli territory, owning Partner Communications through his company Hutchison-Whampoa from 1999 until 2009. After seeking a buyer for the controlling interest for a long time, he ultimately sold his 51% stake to Ilan Ben-Dov.

Waze attracted international giants by virtue of becoming an international company. But it isn't breaking virgin ground: Kleiner-Perkins has invested in Israeli startups before, including 3DV, eASIC and DeviceSpace.

Horizons will be appointing Jason Wong to the Waze board. Wall Street's Mary Meeker, today a partner at KPCB, will be advising Waze on strategy, as will Josh Silverman, formerly the chief executive of Internet communications company Skype.

Waze has more than 7 million users, many of whom are in Israel. Ka-shing and Kleiner Perkins studied the startup's numbers - users, brand loyalty and global dispersion, and concluded that the startup is a growth company, said Waze CEO Noam Bardin. Its main markets at this point are the United States, Italy, France, Spain and Israel, he said - but it's gaining a toehold in farther markets such as Malaysia and Costa Rica.

"Every day 25,000 users register," Bardin said. The company is earmarking the proceeds of its financing round to develop its navigation application for other devices. "If in the past we had one version suited to the iPhone, Android [operating system] and the like, now we're developing applications for different phones, which will let the phones exploit their own unique qualities," said Bardin.

The money will also allow the company to penetrate the Far East, he added, hence the importance of Ka-shing.

"You can't launch service in China without government permission," he said. "Waze needs a strong Chinese partner who can lead its penetration. Li Ka-shing did that with Skype and with eBay in China. Now it will happen with Waze."

Founded in 2008, Waze developed an application called "social navigation," which collates data from users. In Israel, it has more than a million users.

Google has a competing application, Google Maps Navigation. Telmap, another Israeli startup that competes with Waze, was bought a few weeks ago for $300 million by Intel.