Start-up company Cydoor of Givatayim has completed a first round of fund raising (after the seed stage), which brought it $1.2 million in a private placement. Only private investors participated in the fund raising exercise. The largest of them was ECI founder and former general manager Meir Layzer, and former Israel Corporation general manager Doron Steiger. The exercise took place at a company value of $5 million after money.
Cydoor has developed technology that enables advertising banners to be used on programs, in exchange for a significant reduction in the consumer price of the program, or even free distribution, with the software supplier receiving a royalty on advertising sales. The advertisements are updated in accordance with the user profile, itself updated via the Internet.
Gartner Group recently published research showing that software houses are not succeeding in showing adequate revenue growth, and will therefore be compelled to adopt a new business model. Cydoor’s program sounds as though it may answer the need for such change.
The company recently opened branches in New York and San Francisco, and began setting up a distribution network based on large Internet service providers, magazines and computer equipment suppliers. Through its deals with the various suppliers, the company intends to distribute its program free on CDs.
Leading players in the local Internet market consider Cydoor a company with great potential in that area, even though its business-technological model is only partly Internet based.
See: Arena Weekly Start-up review of Cydoor
Published by Israel's Business Arena on March 7, 1999