Only one way for Waze

Shmulik Shelach

Given the risks and the opportunities, a quick sale looks like an almost certain outcome.

So how much is Waze worth? Whoever read the TechCrunch website yesterday believes that the price tag is between $400-500 million (offered by the buyer) and $750 million (asked for by the seller). But the value of the popular navigation application does not derive only from supply and demand on the market, but also, in fact mainly, from the view taken by those involved in the company of what valuation can be achieved if the opportunities that now present themselves are foregone.

The US venture capital community educates its people to be very aggressive in negotiations. But as soon as the business indications are that the valuation could change direction down the track, investors are capable of selling quickly, especially if there are appropriate offers on the table.

It is doubtful whether any venture capital bible comments on the unique situation of Israeli high tech. The problem here, many will say, is that many of the good companies are sold prematurely. That's true. But a much tougher and more distressing problem is that many of the companies that refuse to be sold, despite receiving good offers, end up left by the wayside shortly afterwards.

It's one thing to aspire to be a big company. It's something else entirely when the price of that aspiration includes not only giving up a decent amount of money, but also taking a real risk on technological developments in the navigation market, when you are in that market with Apple, Microsoft, Google, the map providers and the PNDs (personal navigation devices), Intel (with Telmap), and that's just a partial list.

Waze has serious investors, including some of the world's leading venture capital firms and strategic investors, who see the market from the point of view of those who write the checks. Waze could provide them with a good exit, returning close to ten times their money, or perhaps even more.

Given all that, and if there is no material change in Waze's strategy, the company will be sold soon. The low revenue, the crowded navigation market, the large forces involved, the high potential valuation, and the current enthusiasm for the company on the part of users, point to only one possible route.

Published by Globes [online], Israel business news - www.globes-online.com - on January 3, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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