McKinsey buys Israeli AI startup Iguazio, its first acquisition in the country
Global management consultancy firm says Israel has vibrant startup ecosystem, seeks further partnerships, acquisitions
Sharon Wrobel is a tech reporter for The Times of Israel.
McKinsey & Co. has snapped up Israeli real-time data analytics startup Iguazio for an undisclosed sum, marking the global consultancy firm’s first acquisition in Israel.
McKinsey seeks to use Iguazio’s machine-learning platform to help enterprises and organizations deploy and manage artificial intelligence applications and embed them into real time decision-making across all parts of their business to improve their operations, cut costs and boost revenues.
Working with Iguazio’s technology, QuantumBlack, the consultancy firm’s AI arm, will be able to “provide clients with industry-specific AI solutions that are five times more productive, eight times faster from proof-of-concept to production and twice as reliable,” McKinsey said in a statement.
“McKinsey is making a major investment, both in technology and in Israel because we believe in the potential here both on the AI side, that is the technology side, but also on the human capital side,” Ben Ellencweig, McKinsey senior partner and QuantumBlack global leader of alliances and acquisitions, told The Times of israel. “It’s our first product acquisition ever, meaning we are buying a technology, after QuantumBlack a few years ago.”
Founded in 2014, Iguazio has developed a machine learning platform for enterprises to develop, deploy, and manage AI applications at scale and in real-time. The startup has raised more than $70 million in funds backed by investors such as Pitango Venture Capital, Verizon Ventures, Robert Bosch Venture Capital GmbH, CME Ventures, Magma Venture Partners, Jerusalem Venture Partners, Dell Technologies, and Samsung.
“Already about a year ago we looked into how McKinsey can augment its technology innovation. We were in touch with over 1,000 companies worldwide in Israel and beyond and Iguazio emerged as the best fit,” said Ellencweig.
Alexander Sukharevsky, senior partner and global co-leader of QuantumBlack, said that the deal comes at a time of a “lot of turbulence globally, when past data is not necessarily relevant and business models need to be changed because of the tax, cost and regulatory pressures.”
Over the past 10 years, more than $490 billion has been invested in AI by large companies and organizations globally, but only one in 10 projects made it outside the lab and into business, according to McKinsey research.
“We are committed to unlocking the full potential of AI to help clients drive sustainable, inclusive growth. Today, as 90% of AI projects remain in the lab, there is a big opportunity,” said Sukharevsky.
With this acquisition, QuantumBlack is adding Israel as its fifth global R&D hub along with the team of more than 70 data and AI experts at Iguazio, which McKinsey has plans to grow and expand in the coming years, the firm said. Iguazio employees will be working with QuantumBlack’s data scientists and machine-learning engineers around the world on various projects such as improving efficiency and reduce emissions by using AI.
“McKinsey’s experience and QuantumBlack’s technology stack and expertise, now coupled with Iguazio, is the ultimate solution for enterprises looking to scale AI initiatives in a way that directly impacts their bottom line,” said Iguazio co-founder and CEO Asaf Somekh. “We are already serving over 20 customers globally such as financial institutions, airlines, airports, and environmental companies in the US, Asia, and Europe.”
“Now we will have access to the largest customers in the world,” Somekh added.
Looking ahead, Ellencweig emphasized that the acquisition marks only the “beginning of a journey.”
“It’s exciting to bring startup nation to the broader McKinsey and our global partnerships in 60 countries,” said Ellencweig. “Israel has a super vibrant startup ecosystem and we have a message for all startups out there: we would love to build and expand our ecosystem through other partnerships and further acquisition alliances.”