ZenCity raises $6m in A round

ZenCity team photo: Ori Taub

Investors included Vertex Ventures, Microsoft's M12 fund, and Canaan Partners.

Startup ZenCity wants to change the way local authorities make budget decisions about municipal services for residents. The company is developing a decision-making platform that uses data from the local authorities. It collects and analyzes information in real time from sources in which resident talk with or about the municipality: municipal hotlines and feedback forms, but also local news stations and social networks.

This information is analyzed using machine learning algorithms that identity the topics and sentiment, as well as the geographic location to which the gathered information relates. While the information is gathered, it is continuously processed and translated into insights about individual problems and long-term trends concerning the wishes and needs of cities' residents. On the basis of these insights, municipalities can make enlightened decisions immediately about budgeting and managing the services they provide and about general policy.

ZenCity, based in Tel Aviv, was founded in 2015 and has since worked with 30 municipalities: half in Israel and half in the US. The company won a $1 million price in April and the title of most innovative artificial intelligence startup in Microsoft's Innovate.AI competition. The company today announced the completion of a $6 million A financing round led by Vertex Ventures, with participation from Microsoft's M12 fund and Canaan Partners Israel, which also invested in the company's previous round.

ZenCity plans to use the money raised to expand its analytical capabilities to additional languages in order to enter more markets around the world and increase the number of the analysis tools that its platform provides to its customers. The company also plans to expand its activity in the US market and expand to additional markets in South America and Europe. ZenCity's target is to work with dozens more municipalities by the end of 2019, and the company plans to double its current staff of 20 for this purpose.

"Our aim is to help cities be more data-driven and better synchronized with the needs of their residents in decision-making processes. We believe that a great deal of optimization is possible in the municipal sphere, and as we have heard from municipalities and mayors we have worked with along the way, we believe that this is the way to do it," says ZenCity cofounder and CEO Eyal Feder-Levy. His cofounder is CTO Ido Ivri. Both the ZenCity founders have experience in municipal planning and have worked with various municipalities in Israel and around the world.

"Globes": How does your business model work?

Feder-Levy: "We work according to the conventional software as a service (SaaS) model. Our customers are cities, and they usually pay for the service under a one-year contract. There are a lot of false ideas around about the municipalities market. The first, which I want to refute, is that there is no need - there is a huge need in this market; there are many challenges and opportunities. The second is that municipalities have no money. They have a lot of money, but they currently face regulatory restrictions. Unfortunately, current regulation is very discouraging for innovation and is always biased in favor of large companies and against startups.

"There are now more innovative approaches to tenders. One of the ones I like the most is a problem tender, in which the municipality defines the problem that it faces at the level of substance, not features. Then they solicit companies to offer solutions for this need. They have started trying this approach in Israel with the Digital Israel Initiative."

ZenCity

Founded: 2015

Founders: Ido Ivri and Eyal Feder-Levy

Employees: 20

Offices: Tel Aviv

Financing rounds: $9.5 million raised in two rounds

Prominent investors: Vertex Ventures, M12 fund, Canaan Partners Israel fund

Published by Globes [online], Israel business news - www.globes-online.com - on September 6, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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ZenCity team photo: Ori Taub
ZenCity team photo: Ori Taub
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