Facebook splashes out over $100 million to buy Israeli start-up Onavo

Onavo, a developer of mobile app analytics solutions, will become Facebook's first Israeli-based office.

Using Facebook on the Internet 370 (R) (photo credit: reuters)
Using Facebook on the Internet 370 (R)
(photo credit: reuters)
Facebook will acquire a Tel Aviv technology start-up company and open its first office in Israel, the social networking giant announced yesterday.
The deal to acquire Onavo, which reportedly cost Facebook between $100 million and $200m., was far from the largest acquisition of an Israeli tech company.
But Facebook’s purchase is significant because the company plans to convert Onavo’s offices into a new Facebook research and development center, joining the ranks of top American tech companies that have opened R&D centers here. And Facebook’s agreement to keep Onavo based in Tel Aviv, as opposed to relocating the company to Silicon Valley, continues an important precedent for tech companies in Israel, according to an industry analyst.
“We’re eager to take the next step and make an even bigger impact by supporting Facebook’s mission to connect the world,” the co-founders of Onavo, Guy Rosen and Roi Tiger, said in a blog post on the company’s website. Onavo employees did not respond to requests for additional comment last night.
Onavo, founded in 2010, creates mobile applications that allow users to track their cellphone data usage plans.
The company also offers a paid analytics suite for firms seeking to track mobile user activity. It initially raised $13m. from investors. Currently, Onavo employs 40 people, the majority of whom are based in its Ramat Gan office.
While Onavo is the third Israeli start-up to be bought by Facebook, it is the first to remain in Israel.
Jonathan Medved, a top technology venture capitalist in Israel, said the Onavo deal should be seen in the context of this summer’s acquisition of GPS start-up Waze by Google.
Waze, which sold for $966m., insisted on being based in Israel, opening the doors for other companies to demand the same, Medved said.
“You’ve got to believe that [Onavo] watching that fight happen, and [Waze] succeeding, gave them a little ‘oomph’ to make their own attempt,” Medved said. “You’re now seeing [Israeli] companies speaking essentially truth to power — Apple and Facebook — saying, ‘Don’t close us down.
What makes us special is our Israeli secret sauce.’ “You can’t go forward without Israel and you can’t continue to buy Israeli companies and ship them over to Silicon Valley,” he added.
An official for the city of Tel Aviv praised the acquisition, saying that Tel Aviv is the “start-up city in the start-up nation.”
“We expect many more Tel Aviv companies to succeed in advancing the world as Onavo is doing,” Mira Marcus, the municipality’s international media director, said in an email.
The company will play an important role in a major initiative announced by Facebook in August. In conjunction with other major tech companies, Facebook aims to find ways to extend Internet access to the roughly four billion people without it.
Reducing the data usage of popular mobile apps is a central goal of the initiative.
“Onavo will be an exciting addition to Facebook,” an Israel-based spokesman for Facebook wrote in an email.
“We expect Onavo’s data compression technology to play a central role in our mission to connect more people to the Internet, and their analytic tools will help us provide better, more efficient mobile products.”
The spokesman said he was not authorized to release any additional information.
The announcement coincides with several new Facebook projects in Israel. Yesterday, the office of President Shimon Peres unveiled a new Facebook app that allows users to submit questions to the head of state, a year-and-a-half after Peres created his Facebook page in a visit to the company’s headquarters in California.
And on Tuesday, Facebook is expected to host a conference in Tel Aviv about how the social-networking site can aid local start-ups.
Top 10 Israeli hi-tech deals
Facebook’s acquisition of Onavo for $100 million is not the highest price ever paid for an Israeli hi-tech company. Here are the top 10:
1. NDS bought by Cisco for $5 billion (2012)
2. Mercury bought by HP for $4.5 billion (2006)
3. M-Systems bought by Sandisk for $1.5 billion (2006)
4. Creo bought by Kodak for $980 million (2004)
5. Waze bought by Google for $966 million (2013)
6. Trusteer bought by IBM for $800 million (2013)
7. Lipman bought by Veri Fone for $793 million (2006)
8. New Dimension bought by BMC for $673 million (1999)
9. Retalix bought by NCR for $650 million (2012)
10. Shopping.com bought by eBay for $620 million (2005)
Benji Rosen contributed to this report.