I’m proud to announce that eXelate – a Viola Ventures (formerly Carmel) portfolio company since 2007 – was acquired last week by Nielsen (NLSN -NYSE). Viola Ventures was the first fund to partner with Iri Zohar and Elad Efraim, the founders of eXelate and led the first institutional investment round.
Viola Ventuers has always supported the company both in good times and also through some challenging times. We participated in all the subsequent funding rounds when we were joined by leading US funds. At the time of sale, Viola Ventures (or Carmel, as we were known back then) was the largest shareholder in the company.
I have worked closely with Iri, Elad, Mark Zagorski (the current CEO) and the rest of the management team over the years, and saw a great idea evolve to a successful global player. Seeing all of the company’s hard work culminate last week in a well-deserved exit has been immensely gratifying.
When Viola Ventures invested in eXelate back in 2007, the company had an intriguing initial concept with a lot of nurturing and growth ahead of it. But with a passionate founder (Iri Zohar), a strong technology founder (Elad Efraim) and a market that clearly felt the concept was highly innovative at the time, eXelate’s potential was evident. Fast forward to seven years later, and eXelate is a leading independent data platform, ranking 45 on Deloitte’s Technology Fast 500™ and placing 1st in the highly competitive NYC tech corridor and also 6th overall fastest growing Internet company.
“Knowledge is Power”, and that’s basically what eXelate offers
The original idea behind eXelate was that we would become a data exchange. We would harness data from publishers, with a focus on behavioral targeting. For example, if it could be established that a particular user visited several websites on the subject of a flight to Paris, then obviously that user would be worth a lot more to Parisian hotel advertisers than a user about whom no data is available at all.
eXelate’s technology helps to identify the most relevant users to target for specific ads.
The start was not easy. The development of the technology took longer than anticipated, the market was competitive and not well-educated, and privacy concerns were raised – all of which caused the company to miss its initial plans and run out of money. Having lived through these things so many times in my entrepreneurial career, as well as venture investors, my partners and I felt that the team and the technology were worthy of our support and continued to invest and support the company. At a certain point the company started to scale, raised their round B and was well into the race.
Over the years the company expanded its products and services adding online connectivity for data providers, Data Management Platforms software (DMP) and Big Data Science based tools and solutions to identify larger relevant audiences.
Our value evolved from targeting display advertising, to a strategic tool for publishers and advertisers to help them better understand their audience and customers, allowing for smarter targeting on both ends to maximize ad performance and revenue.
Despite the fact that we were not considered the category leader, (BlueKai which was sold last year to Oracle was considered the category leader), nor the largest competitor in the landscape, we were the fastest growing player thanks to a visionary adaptation of strategy, robust technology and aggressive execution. Also, the fact that the relatively crowded niche which originally included something like 50 or so real competitors ended up with only two serious players (eXelate and BlueKai) is a testament to the terrific work that the company did to outgrow, outperform and outlast the vast majority of its competitors.
A major strategic move which allowed us to grow so quickly was the build-up of our robust technology infrastructure and building a bridge of offline data to the online world.
This was our “edge” and it dramatically expanded the amount of data and the global reach of the data offered by eXelate.
Over time we also managed to improve our original business model by offering “all inclusive” subscription pricing. This encouraged marketers to use our data more frequently. We also changed the way we pay for the data from a revenue share to fixed guaranteed pricing, which helped to improve margins and profits. We were among the first in the field to enter the mobile market and invest in big data capabilities. We also devoted a great deal of time and energy to working on compliance with privacy regulations and creating innovative business models.
We also invested heavily in big data and Data Science. We invested heavily in computing infrastructure and recruited a great team of data scientists. This enabled us to have the most robust data connectivity infrastructure.
eXelate by numbers
Working with a great founding team from the very beginning
eXelate was a company that we helped grow “hands on”. From hiring the initial staff to building the product to relocating the founder and the company to the States, bringing on a new American CRO (Mark Zagorski) who proved to be a very successful CEO and building a strong board of directors that included not just investors but also highly relevant experts in the field, hailing from the likes of the New York Times and Yahoo.
The company grew very quickly, and with Iri realizing that America was not his “natural habitat” after all and opting to return to Israel, he ended up advocating for Mark – with whom he felt very comfortable – to take over as CEO, but he remained involved with the company and still serves on the Board of Directors to this day. I look forward to working with him again!
After several years as the only investors in the company and after getting market traction, we helped Iri raise his round B from Menlo Ventures and later were joined by Trident and New Spring. I believe this is a great model for Israeli entrepreneurs – to raise your round A with an able and active Israeli Venture firm (hopefully Viola Ventures 🙂 ) and later raise your follow-up rounds from leading US venture firms that can help you as you scale the business.
A word about the Exit: In general we like to build companies to be IPO ready and stand alone however in this case when eXelate became the last independent company in the space it was clear that this will be an M&A. The company got some inbound interest and with our very active help, management and the bankers we hired, the company was able to get a competitive process going and after a few sleepless nights, we got a great outcome everybody was happy with.
On a personal note, helping build great technology companies is my passion. Working with great entrepreneurs like Iri, Elad and Mark, helping them navigate through the challenges and seeing them succeed is why I work so hard and enjoy every minute of it.