KitLocate’s odyssey shows that Tel Aviv start- ups no longer have to leave Israel to go global
It wasn’t long ago that Israeli companies had to move to the U.S. to get ahead. But the three-year odyssey of KitLocate, an Israeli start-up that offers energy-saving geolocation for smartphone apps, recently acquired by Russian search giant Yandex, illustrates how the Tel Aviv start-up ecosystem has evolved.
Founders Omri Moran, Ron Miller and Yoav Cafri met after their military service through an Army buddy and started playing basketball and poker together. They had never done a start-up before and had no clue how to raise money.
Only months after starting up in 2011 they met an investor at a local tech conference. He referred them to the Junction, an accelerator run by Israeli venture capital firm Genesis, which was accepting applications for a new cohort. KitLocate was one of the few chosen.
While at the Junction the company pivoted its business model from a consumer app that informed users about available discounts around them, to the core technology that app needed, the ability to monitor a user’s location without draining the phone’s battery.
Efficient Use Of The Battery
“KitLocate’s core tech is a combination of deep understanding of the device and its sensors along with advanced user profiling,” says Moran. “By understanding when the right time is to sample and with what sensor, KitLocate is able to consume 85% to 90% less than similar solutions.”
Six weeks after it changed direction to focus on the battery issue it won first place and a $25,000 prize in a global competition organized by MasterCard on mobile-payment innovation. “We aren’t a mobile payment solution but we argued that our tech is the next leap in mobile payment solutions since being able to understand where the user is will boost the penetration of mobile payment solutions and their usage,” says Moran.
“When I was about to finish my presentation (and to prove my point) I urged the audience to think about every product that presented in the competition and to think about how much value we’d bring them. All the other solutions were variants of mobile wallets and they clearly would benefit a lot from our tech.”
The prize helped KitLocate raise $700,000 from local investors and sign up some major clients.
Yandex Buys KilLocate
It also led to an offer from Microsoft Ventures (which did not invest) to join its Tel Aviv accelerator. Although KitLocate didn’t need more funding or free office space the founders decided the company might benefit from the networking.
It did. Microsoft Ventures introduced the start-up to Russia’s search giant Yandex, which purchased KitLocate for several million dollars in March of this year. (The exact sum was not disclosed.)
The KitLocate team will form the core of a research and development center that Yandex is opening in Tel Aviv, and the Russian search engine plans to hire more developers and managers.
KitLocate customers already include retailers like Sears, as well as parking service Pango Israel, MasterCard franchises, and social apps and gaming companies. Being part of Yandex will help the company “massively scale up” says Moran.
Yandex’s Foray Into Israel
KitLocate’s acquisition was not the first in Israel for Yandex. The Russian company took a stake in the Israeli face-recognition technology start-up Face.com in 2010 but sold it when Facebook acquired the company two years later. In 2012, it invested in Haifa-based appointment booking start-up GBooking and in May of this year participated in a $4.1 million A round in SalesPredict, a predictive analysis start-up.
It is part of Yandex’s global plan to work more closely with start-ups. The company says it is actively searching in Europe, Israel and the U.S. to find innovative search and geolocation technologies; personal cloud services such as document sharing between devices; mapping technologies connected with directories, places and navigation; and applying big data analytics to areas such as health and to combat fraud in the financial services sector.
Yandex says it will distribute KitLocate’s technology on the international market and also use the company’s technology to improve its own services, including mobile search and targeted advertising.
The Israel R&D center will initially focus on geolocation and KitLocate CEO Omri Moran will lead the Israeli development center as Yandex’s Israeli General Manager.
This article is one of a bigger pool of stories appearing in a DLD Informilo special edition print magazine that has been distributed at the DLD Tel Aviv festival 2014. This story also appears on www.informilo.com