Snapchat to Buy Israeli Augmented Reality Startup Cimagine for Estimated $40 Million

The acquisition of Cimagine is the first in Israel for Snapchat.

The Snapchat app is displayed for a photograph in Washington, D.C., U.S. Feb. 18, 2015.
Andrew Harrer, Bloomberg

In its first foray into Israel, the company behind the wildly popular Snapchat app has agreed to buy the Israeli augmented reality company Cimagine Media for what sources estimated was $40 million.

Cimagine’s technology is used to scan and identify surfaces in scenes captured on a mobile or wearable device camera and overlays life-like 3D images onto real-time video. Unlike similar offerings, Cimagine’s markerless augmented reality doesn’t require the user to print and place a reference marker to identify surfaces and estimate scale.

Augmented reality is being used in a wide variety of applications, but Cmagine’s niche is retail, where it has formed partnerships with the British retailers Shop Direct and John Lewis as well as with Coca-Cola. Users can virtually place furniture or appliances they are thinking of buying in their homes before making a decision.

The retail factor could be the reasoning behind the decision by Snap – the company behind the Snapchat app – to buy the startup. Neither company had confirmed the acquisitions, but Snap, Snapchat’s parent company, is planning an initial public offering next year at as much as $25 billion and offering shopping options through the company’s popular messaging app could create new revenue channels.

Cimagine was formed in 2012 by CEO Yoni Nevo; Nir Daube, vice president for product development; and Ozi Egri, vice president for R&D – all of them entrepreneurs and engineers with a background in computerized vision. Since then the startup has raised about $3 million from the technology incubator Explore, where it operated its first two years. It won financing from Plus Ventures, a venture capital arms affiliated with Explore, from 2B Angels and the crowd-funding platform OurCrowd.

Sources termed the deal of acqui-hire transactions, where the buyer is more interested in obtaining the team behind the company than the company itself or its technology. Acqui-hires usually occur when a startup hasn’t succeeding in rolling out a successful product but has a strong R&D team.

Snap will be turning the tiny startup into a research and development center.