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Google’s first Israeli acquisition no surprise to investors

Posted By Brian Blum On May 3, 2010 @ 12:00 am In | No Comments

LabPixies handpicked group of angels share insights about their Israeli company’s acquisition by Google.

 

“I immediately loved the company’s products,” Yaron Carni, lead investor in LabPixies.

Google’s announcement last week that it was acquiring Tel Aviv-based LabPixies for a rumored $25 million caught some Israeli analysts by surprise. That’s a tidy sum for a small startup with just 12 employees that has raised less than $2 million over its four years of operation.

Yaron Carni, LabPixies’ lead investor wasn’t caught out, however. “I immediately loved the company’s products, their vitality and, of course, the team,” he tells ISRAEL21c. Speaking on behalf of a handpicked group of angels including Auren Hoffman and Fabrice Grinda, Carni says, “we were all deeply impressed with the character, commitment, talent and forthrightness of the founders.”

LabPixies was particularly attractive to Google due to the company’s role in developing some of the first and subsequently leading ‘gadgets’ for the iGoogle platform, Google’s alternative interactive home page. LabPixies products have garnered as many as one billion impressions a month while signing up 40 million users. One of its most popular products is ‘Flood-It,’ a game that involves dragging colored balls around the screen. “It’s very addictive,” says Carni.

Translations, news, weather

LabPixies also builds translating programs, news and weather reports, calculators and calendars that run on other social network services including Facebook, Hi5, Yahoo and MySpace, as well as Google’s own Android mobile operating system.

However, LabPixies doesn’t make its money from the Web, but by selling mobile apps, primarily for the iPhone. Company CEO Ran Ben-Yair won’t divulge financial information, but he did tell the Israeli business journal The Marker several months back that the company has “millions of dollars in revenues.” Carni adds that the company has kept costs down by staying “lean.”

Despite Google’s increasing competition with Apple in the mobile space, there’s no indication that the search engine giant will drop its support for LabPixies’ iPhone products.

Google plans to merge LabPixies into its Tel Aviv office, which according to a press release “will anchor our iGoogle efforts across Europe, the Middle East and Africa,” leveraging LabPixies’ “knowledge and expertise to help developers and improve the ecosystem overall.”

The big winners, of course, are the investors and LabPixies founders – CEO Ben-Yair, VP R&D Oded Poncz, VP business development Nir Tzemah, and creative director Udi Graff.

Seduced by the pixies

Investor Fabrice Grinda wrote on his blog that he was “seduced by the company. They had crazy amounts of traffic in the right countries (Western Europe and the US). Their users loved them. Moreover, their products fell squarely in a rapidly growing ecosystem: Social networks and mobile applications.”

If anything, Grinda is sorry to “sell so early. The company and team are great and the category is only becoming bigger.”

Google Israel’s managing director, Prof. Yossi Matias, is understandably bullish on high-tech in the country. “Google believes in Israeli innovation and creativity and we’ll continue to strive for collaborations with local companies and startups in the future,” he says.

Carni, in turn, is a big believer in Google. The deal to buy LabPixies spanned a number of months, Carni says, during which time Google was “a pleasure to work with… from the product people to the human resources professionals. They were always direct, honest and comprehensive.”

LabPixies is Google’s first acquisition in Israel. The company joins other international Internet heavyweights such as AOL, Microsoft and eBay who have invested in the local Silicon Wadi high-tech scene. Google has been active in Israel since 2005 but has never bought a company until now.

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