Another local exit within ten days. After Interwise, and Saifun Semiconductors Ltd. (Nasdaq:SFUN), yesterday it was the turn of Israeli high-tech company Traiana to announce that it had been acquired by UK corporation ICAP Plc (LSE: IAP) for $247 million. Most of the payment will be in cash. Under the agreement, Traiana's activity in Israel is supposed to be retained, although it has not been yet decided what form this will take.
Traiana was founded in 2000 by CEO Gil Mandelzis and Shai Sole. The company has raised $42.5 million from Pitango Venture Capital, Gemini Israel Funds, Sequoia Capital, Eastman Ventures, and other investors. Triana employs 120 people at its offices in Ramat Gan, New York, London and Chicago. “Globes” selected the company as one of Israel’s most promising start-ups in 2005.
ICAP is listed on the FTSE 100 and has a market cap of $7 billion. The company handles $1.5 trillion in transactions a day in interest rate, credit, commodities, foreign exchange, and equity derivatives. Over the past year, Traiana has closely cooperated with ICAP in the use of the latter's EBS, the world's largest foreign currency trading platform. Through the acquisition, ICAP and Triana will be able to expand and accelerate their growth in foreign currency trading and other fields.
A dead market in 2000
Traiana develops software products for financial markets. It specializes in automating procedures that were carried out manually and provides processing and clearing services for transactions between financial institutions (banks, brokers, hedge funds, institutional investors, and others). Triana's solutions meet the growing requirement for a global service market, and enable the automation of a large-volume of transactions, while reducing risk and costs. Its services are used by over 50 of the world's leading banks and have become the market standard for post-trade processing of foreign exchange transactions amounting to hundreds of billions of dollars daily. Traiana will probably record $15 million in revenue this year.
Like almost every other company founded in 2000, there were times when Traiana's fortunes did not look so good. Gil Mandelzis had an idea and a vision, but not long after founding his company, he was the first to admit the market was dead. Traiana had to make adjustments and changes to help it stay afloat, and thanks to these it managed to survive the hard years, and when the overall recovery got underway, it became a "star." It managed to penetrate the tough and conservative world of the big financial institutions, to which it sold products that interfaced with the guts of financial activity.
The company's investors believed in it despite the ups and downs in its activity. Gemini was the first to invest in Traiana, and continued to support it right through to the exit. In 2002, Gemini was joined by Evergreen, Eastman Ventures, and Sequoia, which became the company's largest investor. Pitango joined in the company's last financing round two years ago, at a value of $80 million. Pitango's investment was initiated by Rona Segev-Gal, who moved to Pitango from Evergeen and continued her involvement from there.
Mandelzis said, following the completion of the deal with ICAP, "Customers, partners, and finally ICAP, were impressed with Traiana's capabilities. Traiana's path wasn't always simple, and it was made possible thanks to the full cooperation and support from employees, and from the funds that invested in us, Gemini, Pitango, Evergreen and Sequoia. The partnership with ICAP will enable us to ramp up our growth and leadership in the global market, and we're looking forward eagerly to the start of Traiana's next episode."
What the investors say
Gemini senior partner and Traiana board member Adi Pundak-Mintz: "The Traiana management, headed by Gil, made an exceptional job of guiding the company skillfully and patiently in a competitive market, and in the environment of the largest and most important customers in the world. The company's management demonstrated outstanding professionalism, and an exceptionally accurate reading of the market map, and the results speak for themselves."
Globes: What was it that made you stick with the company when times were tough?
Pundal-Mintz: "The company started in 2000 and went straight into a nuclear winter. It was interesting to see how the team did all they could to put together a strategy and maintain motivation among employees. In addition, this is company that has been supported by Israeli funds all along the way.
"Gemini invested in the company at the beginning, even though investing in companies focusing on financial markets wasn't popular. It wasn't a big market then. We invested on our own, and we retained our share. The company began operating a B2B model that should have been a big market, but collapsed. Gil is a most impressive person, and the fact is that unlike other entrepreneurs who are unwilling to admit their market has disappeared, he was the one who approached me and said there was no market. On the other hand, right from the start he brought it a strong management team which drafted a new strategy and vision. The transparency and the quality of management convinced me that this was a company worth supporting."
Pundak-Mintz says that Traiana made a change in vision and began marketing its software as a service. "That wasn't popular in 2002 either. They had to find the market because it was clear that it would be difficult to sell the software to finance managers at the big corporations. It became clear, ultimately, that connecting with brokers was the right move; they're the ones involved in the dealings between the parties, and until Traiana offered its software, deals were done manually, using fax machines."
Segev-Gal also has words of praise for Mandelzis. "Traiana's success is built on a superb team of managers and employees, headed by an entrepreneur with extraordinary qualities. His determination and persistence have now proved themselves, as Traiana's technology is being adopted as the standard in the financial world. Traiana went through some trying times, but it overcame them thanks to the determination and vision of Gil, who didn't give up, was a leader for the company and investors, and inspired everyone to come on board."
Sequoia partner Haim Sadger said, "Traiana is proof that the right business model and global thinking can turn even an Israeli start-up from Ramat Gan into a leader in a market of giants, and the provider of a central strategic infrastructure to the world's most important bank customers."
Sadger too, complimented Mandelzis. "Gil has the energy to support a company and vision. He was the one that fought for the company, and he was the one that brought the vision to realization. Moreover, he has a vision for the future and he will realize that too. I have no doubt about that."
Published by Globes [online], Israel business news - www.globes.co.il - on October 11, 2007
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