Fifth Dimension, an Israeli security-technology startup that counted former top Israeli security officials in its ranks, has shut down after a key backer, the Russian oligarch Viktor Vekselberg, failed to transfer all the capital he had committed to putting into the company.
The United States imposed sanctions on Vekselberg and his Renova Group last April to punish Moscow for suspected meddling in the 2016 U.S. election and other alleged “malign activity.”
His venture capital fund Columbia Nova Technology Partners was among a handful of investors that had invested more than $50 million into the Fifth Dimension since it was formed in 2014.
“Not only could he not deliver the money he promised, but his presence on the list of company shareholders at a time when his foreign assets were being blocked by the U.S. treasury prevented any other venture fund from coming in as an investor,” said one Fifth Dimension executive, who asked not to be named.
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Vekselberg’s role in the company had created other problems for Fifth Dimension, including the collapse of a deal by it by another Israeli security-tech company, NSO, last November.
“The sale to NSO would have been good for both sides but it didn’t happen,” said the source, who blamed NSO’s controlling shareholder, the U.S. fund Francisco Partners, for blocking the deal.
Fifth Dimension counts several former leading Israeli defense establishment figures, including former army Chief of Staff Benny Gantz, who is chairman, and Ram Ben-Barak, a former deputy head of the Mossad, who is member of its advisory board.
Apart from the problems created by Vekselberg, Fifth Dimension had encountered problems selling its intelligence-gathering technology to foreign governments.
Designed for civilian law enforcement agencies, it raised problems of invasions of civilian privacy. The company had been working to solve the problem, but one of its two founders meantime left and its workforce shrunk by two third from a peak of 100.
Sources said Fifth Dimension’s technology, which uses artificial intelligence to sift through masses of varied data, was excellent and that it would try to sell the intellectual property to another company.