Israeli company Orcam, which develops devices to assist those with visual and hearing impairments, is implementing another organizational change and spinning off its hearing division into a separate company.
This will enable OrCam, which was founded by Mobileye Global Inc. (Nasdaq: MBLY) founders Amnon Shashua and Ziv Aviram, to become a profitable company and go for a Wall Street IPO when the window of opportunity opens. OrCam's hearing assistance activities will attempt to raise $10 million and become an independent company that could be sold to one of the tech giants.
As part of the reorganization, OrCam is expected to lay off 50 employees from the visual division while the R&D team from the hearing division, which also numbers about 50, will become part of the new company. OrCam has 320 employees comprised of 250 employees in its Jerusalem development center and 30 sales staff in North America, Europe and Asia. After the split OrCam will remain with 220 employees.
OrCam Hear is responsible for one the company's newest and most interesting products, which aims to produce AI based devices to assist hearing impairments. The Hear application allows the hard of hearing to focus with a digital listening device on an individual speaker when attending social events with a lot of background noise.
The application includes a microphone connected to a telephone, an app for the phone and special headphones, which allows the user to mark the speaker on the screen and thereby focus their hearing device onto the voice of the chosen speaker. In this way, the user can navigate between the speakers and hear their voices clearly, while filtering out background noise at events such as weddings, family meals and parties.
Ahead of an IPO and acquisition
OrCam is encouraged by the positive feedback received on the Hear product at the CES electronics conference in the US last month and the response by partners and experts in the audiology industry. The company feels confident that the spinoff and raising independent capital will allow the continued development of the product which may in the future attract an acquisition by a tech giant. Potential buyers could include a smartphone manufacturer like Apple or Samsung, which strive to equip their advanced phone models with features that held monitor medical measurements and assist users with handicaps.
So behind the spinoff is the plan to turn OrCam into a profitable company ahead of a flotation, and to develop the hearing division in preparation for an acquisition by a technology giant.
The current mixing of all OrCam's products into one company creates a loss-making concern that deals in many products that are not related to each other. The company's products for the visually impaired and dyslexic, such as "My Eye" and "Read", which help with reading, spatial understanding and writing, already produced $65 million in annual revenue in 2023, up 25% from 2022, and expected to rise to $100 million in 2025.
To attract additional investors
The same investors will stay behind the company that is spun off including Shashua and Aviram as well as Harel, Clal Insurance, Leumi Partners, Meitav Dash, and tech investment funds like Intel Capital, Aviv Ventures and Big Tech 50. However, OrCam's hearing division hopes to attract additional investors to raise $10 million at a company valuation of several tens of millions of dollars.
For potential investors, Hear has been presenting a road map that includes upgrading from the app's current ability to choose four speakers to eight speakers, and subsequently the system's integration into the chips of telecoms and openness to all types of headphones and hearing aids. Currently, the product is in the beta stage, with the company expecting to receive marketing approval from the US Food and Drug Administration (FDA) in the coming months, which will allow it to start selling the product. The company tells investors that the market is a "blue ocean," meaning it lacks serious rivals offering a similar experience.
In the first stage, OrCam's Hear tech team will move to the new company and over the next three months a VP R&D and other VPs will be appointed as well as a CEO
OrCam is currently managed by CEO Elad Serfaty. Ziv Avraham and Amnon Shashua serve as co-Chairmen and cofounders.
Improved products
As one of Israel's most veteran companies in AI, Jerusalem-based OrCam has undergone changes and upheavals following developments in the field. At the end of 2022, "Globes" reported that the company fired 16% of its 380 employees, after switching its flagship product in visual assistance to processing data in the cloud rather than through a local processor.
OrCam chose to improve its product through compressing the images it received and conveying them to a cloud to process them using natural language models, such as those of AI21, another company founded by Shashua, and transmit back to the user the reading of the text, intelligent contextual explanations while even creating new texts such as writing a summary or offering explanations for concepts and phenomena. Due to this, about 60 employees involved in the development of the processing on the device itself, left the company at the end of 2022.
After a year of integrating language processing models developed by the company and AI21 Labs, OrCam's flagship product, MyEye3 was launched. The product allows a reading aid to be worn over spectacles that not only reads books, signs, product labels and other texts, but also gives the user explanations and provides them with context in response to questions.
A similar product, OrCam's Read3, allows users with dyslexia or reading problems to scan texts, understand them and ask questions about them. Each of these product categories is responsible for about half of the company's revenue.
Published by Globes, Israel business news - en.globes.co.il - on February 28, 2024.
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