French venture capital firm Iris Capital plans to expand its investment activity in Israel, and it will invest tens of millions of dollars in Israel in the coming years. The firm's investment program includes new investment in Israel to the tune of $5-15 million annually, in addition to follow-on investments in existing portfolio companies. On Thursday, it announced that it led a strategic investment of $10 million in Israeli Wi-Fi solutions company Celeno, in which it was joined by Celeno's existing shareholders. The investment is intended to support Celeno’s expansion in Europe and its product development.
Iris Capital is the only French venture capital firm that operates directly in Israel. Its representative in Israel is Yaron Rosenbaum, a partner in the firm. The firm began as the investment arm of Orange-France Telecom and advertising agency Publicis. They were later joined by state-owned investment bank Bpifrance, automotive technology company Valeo, investment bank BERD, among others. Iris manages $900 million, and is about to raise a further fund, Iris Next, which will amount to €250 million.
So far, Iris Capital has invested in some 50 companies, mainly in France and Germany. In Israel, it has invested in cybersecurity company Secret Double Octopus, Internet company Hola, and now Celeno. In the past it invested in myThings, which closed last year.
Talking to "Globes", Rosenbaum said that the firm offered Israeli companies access to the European ecosystem. "I see my role as connecting the French and Israeli ecosystems. Many French people come here who are very well connected in France. France is a fantastic bridge to Europe, and Europe is not what it was five years ago as far as innovation is concerned. Many of the fund's investors are large European companies, and they expect from us focused exposure to the things that interest them."
Rosenbaum says that Iris Capital's involvement does not end with the money. "We look for companies that we can help. We don't just put the money down and go, but invest in places where we can advance the companies."
Rosenbaum cites the investment in Celeno as an example of involvement in a portfolio company. He says the company wasn't seeking another fund-raising round, and decided on it in order to bring in Iris Capital as a strategic investor. "We see them as something exceptional. They are about to release in early 2019 a new product that will mean nothing less than a revolution in Wi-Fi," Rosenbaum says.
Celeno founder and CEO Gilad Rozen also says that as far as he is concerned Iris Capital's investment is not a matter of raising funds but rather of strategic investment. "Iris approached us and we tried to see what the mutual benefit would be in investment. Iris is a well-established European fund and the investors in it are major European companies, some of them in areas that are of great interest to us, and that we want to get into. We saw a strategic angle here, and they will be able to help us expand our customer base."
Ra'anana-based Celeno was founded in 2005. It develops Wi-Fi chipsets that facilitate high-volume wireless connectivity (Gigagbit Wi-Fi). Its chipsets are used in routers produced by companies like Samsung, ARRIS, and Compal designed according to specifications from communications providers like Vodafone, Liberty Global, and Charter Communications.
The company is in the process of developing new products that will provide a response to the high demand for substantial bandwidth to be used not just for connecting to the Internet, but also for transmitting high-quality video and for home IoT installations. Rozen says that the market's requirements have become very demanding, while the technology has hardly developed in the thirty years that it has existed.
The impression from speaking to Rozen is that the company is at a stage at which it is looking for an exit deal. It has held seven fund-raising rounds totaling $116 million (including the current round) from Pitango Venture Capital, Cisco, 83North (formerly Greylock IL), Liberty Global, OurCrowd, and other investors. It employs over 150 people at its offices in Ra'anana and in the US, Europe and Asia. Rozen says that its revenue is in the tens of millions of dollars annually, and is growing at an annual rate of 30%.
Have you received acquisition offers?
Rozen: "I'm happy that we exist and are growing and entering new market segments and developing new products. Why have we not been acquired? Probably because there wasn't a fit that satisfied everybody. I think we have fairly unique technology and a very prestigious customer base, and the company is growing and doing well. If there's someone for whom that's of interest, I think we're a 'good product.'"
Published by Globes, Israel business news - en.globes.co.il - on January 6, 2019
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