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Mapping Israel Start-Ups – Automotive 2.0

June 6, 2016

By: Emanuel Timor and Liran Hason
Israel Startups - Automotive 2.0 by Vertex Ventures - June 6, 2016-ii

The global automotive industry is going through one of its greatest changes ever. The industry is being disrupted and reshaped by a wave of innovation that may fundamentally change the cars we use, the identity of the driver and the way we spend our time while commuting. While it is fair to question the pace of change and how fast it will happen, it is becoming hard to imagine a future without self-driving cars and a drastic decrease in car accidents. Four technology trends are fueling these changes, including (1) electric vehicles, (2) autonomous cars and Advanced Driver Assistance Systems (ADAS), (3) connected cars and (4) on demand car riding.


New entrants like Google, Apple and Tesla are taking an important role in driving the next generation of cars. Uber is suggesting a new model for car ownership. All major car vendors and tier one suppliers are moving faster than ever, adopting and investing in new technologies and services. Recently, GM acquired an autonomous-driving startup called Cruise Automation for an estimated $1B and also invested $500M in ride sharing platform Lyft.


Israeli entrepreneurs have joined the race. The interdisciplinary nature of the Israeli high-tech industry places Israel in an ideal position to be a major player in the new automotive industry. Our research has identified close to 150 automotive start-ups and research groups that are active in Israel, a 2x increase compared to the number of active start-ups in 2013. We estimate that in the last 2 years Israeli start-ups in the automotive space have raised in aggregate $820 million.


Solutions for autonomous driving and ADAS are the leading fields in the Israeli automotive scene thanks to Mobileye. Leveraging the Israeli expertise in machine vision, Mobileye has become the world leader for Advanced Driver Assistance Systems – trading at a market cap of approximately $8B and with annual revenues of approximately $300M.


The success of Mobileye and the understanding that one of the most challenging and rewarding technical challenges nowadays is the field of autonomous driving led to a wave of innovation. This area attracts some of the most talented engineers in Israel, including a few serial entrepreneurs and unique technologies that were developed for military needs and are now converted to commercial applications. Some of those companies are still in stealth mode but we are certain that they will make an important contribution to the automotive industry. Solutions in this field are mainly next generation sensors that will serve as the eyes of the car at day and night as well as bad weather conditions, highways and heavy urban traffic. Other solutions enable monitoring drivers and passengers’ behavior to platforms for dynamic mapping.


Israel is a world leader in the cyber space with an estimated 400 start-ups that are developing next-gen cyber solutions. This may explain the fact there are about 10 cyber security automotive start-ups in Israel. Most advanced are TowerSec that was recently acquired by Harman and Argus Cyber Security, a Vertex portfolio company that raised a $26m round of financing with participation from major tier one vendor Magna International.


Israel is perceived as home to cutting edge technology, and rightly so. At the same time, not many are aware of the Israeli innovation in the area of services. Israeli start-ups are taking an important role in creating new transportation services that will change, not only the way we use our cars but public transportation as well. Waze (a Vertex company), now part of Google, changed the way we navigate while driving. Gett, Via and Moovit are already enjoying significant traction and have raised a total capital of approximately $750M. Earlier stage Fanzone offers a platform for fans to share rides to live events and was chosen by UEFA as the official ride services platform of EURO 2016.


Two additional interesting service companies, both led by second time entrepreneurs are Nexar, a service for safer driving and Otonomo that helps OEMs to create new services and revenue streams by leveraging the huge amount of data that is collected from cars.


Major automotive industry leaders recognize the importance and potential contribution of Israel. GM opened a major development center in Israel and made few investments in Israeli start-ups while Harman acquired two Israeli start-ups, iOnRoad and Redbend. The highest investment to-date by a major automotive vendor in Israel is the $300M investment of Volkswagen in ride services application Gett. The Volkswagen partnership with Gett was in parallel to the Toyota investment in Uber and the Apple investment in China based ride service Didi Chuxing, demonstrating the importance ride sharing may have in the world of automotive 2.0.


We at Vertex Ventures Israel believe we’re at the beginning of a new era and look forward to see more start-ups joining the ride.

We hope you will find this map useful.