For its third direct investment in Israeli technology – and its second in a month – Chinese internet giant Baidu has chosen Taboola, one of Israel’s biggest Internet exports and one of the best-known Israeli brands in the web world.
Baidu invested a sum it referred to as “millions” in the tech firm, saying that the new partnership “brings together two cutting-edge technology companies that are re-defining the ‘search’ and ‘discovery’ categories across the world’s biggest markets. Together, Taboola and Baidu plan to bring discovery to the Chinese market, where mobile is the number one way people go online.”
“Though our roots are in China, Baidu actively seeks out innovative technology companies abroad to partner and invest with,” said Peter Fang, senior director of Corporate Development at Baidu. “Taboola’s remarkable vision and growth over the past few years captured the admiration of our executive team, and we’re very excited about the potential of the discovery market worldwide.”
Taboola is best-known for its “you may also be interested in” meme, which is ever-present on innumerable web content pages. The system is used to drive traffic from one site to another, or to keep readers on a site by offering them more of what they came for. Using advanced intelligence techniques based on hundreds of metrics – how long a reader stays on a site, how many times they visit one, which ads they linger on when viewing a site (e.g., how quickly they close pop-up windows), where they are located, and more – Taboola determines what content will be most interesting to a reader, and presents links that, site owners hope, will garner more clicks for a site or a network.
Taboola and another Israeli firm called Outbrain dominate the industry (officially known as “content discovery”), and the algorithms they have developed, as well as their vast experience, make them very attractive to investors for their ability to keep content perusers’ attention longer. Long rumored to be considering an IPO, Outbrain recently appointed former AVG Chief Technology Officer Yuval Ben-Itzhak as its CTO, a move analysts said was part of Outbrain’s preparation of an official big-name management layer that would make an IPO more palatable to investors.
Talk of a Taboola IPO hasn’t been as rampant, and in recent interviews CEO Adam Singolda said that the company was not planning one right now. But the company is definitely IPO-worthy; last February, Taboola raised $117 million in Series E financing, a sum that most Israeli start-ups can only dream about when they go public. That funding, said Baidu, “represents another significant vote of confidence in Taboola and the future of content discovery,” and is an indication that content discovery will continue to experience growth.
Baidu, China’s biggest web services firm with nearly $8 billion in revenues last year, has directly invested in three Israeli companies now. Besides Taboola, the Chinese firm invested in April in Tonara, a fully digitized sheet music platform for professional and amateur musicians which follows music (monophonic or polyphonic) as it is being played, identifies notes, and shows the sheet music and specific notes as they are being played (currently, it works with piano, violin, cello and flute).
Prior to that, Baidu invested $3 million in Israeli video capture firm Pixellot, the originator of the unamanned “capture-all” system, which deploys cameras to capture all angles and views of a venue. Those investments followed Baidu’s first foray into the Israeli investment scene last October, when Baidu, along with Chinese insurer Ping-An and software company Qihoo360, invested in an venture capital fund sponsored by Israel’s Carmel Ventures.
That the Chinese search giant is becoming a serial investor in Israel is not surprising, according to Edouard Cukierman, chairman of Cukierman & Co. Investment House and a managing partner of the Catalyst Investment Funds.
“China over the past two years has become the number one investor in Israel,” said Cukierman. “For them, Israel is a great source of technology to help them develop their economy, while for us, it’s a fantastic opportunity to gain entry into the biggest market in the world. As much as we are helping them, they are helping us.”
Nathan Low, an Israeli-American investment banker whose ZionTech Angels group has paired up dozens of Israeli companies with foreign investors, also sees China as a place where Israelis can do business – lots of it.
“Israeli start-up companies can solve problems with the technologies and products they already have in hand, eliminate or vastly reduce China’s food and water shortages, improve freight logistics, optimize municipal bus schedules, reduce pollution, as well as improve health care,” said Low. “China and Israel are destined for partnership. China has the money and the markets. Israel has the products to solve problems and address opportunities.”
“We’re extremely honored to gain the support of such an esteemed global partner as Baidu,” said Taboola CEO Singolda. “We believe that discovery has massive growth potential in both existing and untapped markets around the world, and we plan to grow this new category even further with Baidu to help change the way people in China discover content they may like and never knew existed.”