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Continued: Israeli Internet startups poised for the spotlight after $1 billion sale of Waze

  • Article by: MAX J. ROSENTHAL
  • Last update: July 4, 2013 - 2:00 AM

Vardi expects that the Waze sale will spark a similar round of growth.

Along with attracting new investors, each successful new company creates a new supply of experienced employees who may go on to form startups of their own.

"In three years, there are going to be a lot of people who are employees of these companies who are going to go out into the market," said Micha Kaufman, the CEO of Alexa, an Amazon-owned web analytics service, ranks Fiverr among the 200 most visited websites in the world.

Some experts warn of overconfidence. The low costs of launching a consumer-oriented startup, which do not require factories and large machinery used by traditional companies, has made it easy for anyone with an idea to start a business. Those low costs make the companies attractive to investors, who can afford small bets on promising startups.

"I do expect more entrepreneurs to throw their hats in the ring," said Adam Fisher, the head of the Israel office of Bessemer Venture Partners, a U.S. firm. He cautioned that with few barriers to entry, the Internet market could be flooded with companies that have little chance of success.

"We welcome them, but we hope they don't misread the success of Waze," Fisher said. He pointed out that a company that develops an app or program must also figure out how to make it profitable, a problem that traditional tech companies like chip manufacturers don't have.

Still, the success of Waze generates optimism among Israeli Internet companies. "All the press that all these exits are getting ... creates confidence for future buyers," said Yaron Carni, a veteran investor and head of the Tel Aviv Angels Group.

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