InnoMedia of Singapore has decided to invest $3 million in Israeli company VideoSurfer, in exchange for 20% ownership in the company. This is InnoMedia’s first investment in Israel. VideoSurfer general manager David Weisman told "Globes" that the deal was done at an estimated company value of $15 million. InnoMedia transferred $1 million in the last few days, and will complete the investment by the end of 1998.
VideoSurfer was set up two years ago, and currently employs 25 people, most of them in development. It has developed hardware based on a RISC processor and the veteran VXWorks operating system enabling an Internet surfer to engage in video conferences and to send and receive files and e-mail.
Last year, VideoSurfer started to make its first sales, which amounted to $500,000. Weisman estimated that the company’s 1998 sales would total $2-3 million. The tie with InnoMedia, which invested the sound blaster, was formed after the latter ordered 2,000 VideoSurfer devices for distribution in the US.
The company is in an entirely new market of Internet based domestic communications systems sold to the consumer for $299-399. Weisman said the product’s customers were Internet service providers who sell it to their end-customers. At present, VideoSurfer has only one competitor, Eight by Eight of the US, which beat it to the market, but is based on another technology.
Among the investors in the company are: Dovrat Shrem group funds; Virgotech, the company set up by ex-Scitex people; Ishal; and private investors such as Yoel Gat and Yigal Kochavi.
Published by Israel's Business Arena on August 11, 1998