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“A big day for Israeli hi-tech” – Intucell acquired by Cisco for $475M

“Today is also a big day for the Israeli startup scene, which will gain even more respect for developing cutting edge technologies applicable to companies around the world,” reported Josh Constine in TechCrunch.

Adam Fisher, head of BVP’s European office in Herzliya, Israel, discovered Intucell and told TechCrunch: “Israel is a tech pioneer in just about every domain venture funds invest in today, including Internet, mobile, enterprise infrastructure, semiconductors and telecom. We view Israeli start-ups in the same light as American start-ups, because they have a very similar purpose, structure and ambition, unlike many other foreign start-ups which first focus on their domestic market. An exit like Intucell does not go unnoticed as it proves that incredible outcomes are possible and Israel is a not only producing exits, but businesses.”

Bessemer Venture Partners racked up a huge win today. Two years ago it invested $6 million in exchange for nearly half the equity of Israeli startup Intucell, whose networking tech lets carriers handle more mobile traffic. Today, Cisco announced plans to buy Intucell for $475 million in cash, and BVP will take nearly half that sale price.

Funding Intucell’s entire $6 million Series A round was a risky bet for Bessemer. At the time, the startup had just six employees and no customers. But together, two of Bessemer’s partners realized there was something special about Intucell and its self-organizing network (SON) software.

Intucell’s technology helps mobile carriers dynamically adjust their cellular grid to maximize mobile traffic speeds and minimize dropped calls. Without SON software, a carrier’s service slows down and becomes less stable under heavy load or when users travel to the edge of a geographic block of the static grid. Any optimization had to happen manually, which was inefficient and inadequate.

Intucell’s SON uses big data to assess the state of a network and lets a carrier’s towers communicate with each other. That way they can expand or contract their cells in real-time so customers on the fringes of a block get picked up by neighboring towers, and users in the center of that block get much better reception.

Adam Fisher  was impressed with founders Rani Wellingstein, a serial entreprenuer and telecom veteran from Celltick who previously sold NKO to ECI, and Ido Susan, a 26-year-old tech wunderkind. Together, Goodman and Fisher handled BVP’s investment in Intucell, each taking a board seat with the startup. During due dilligence, Goodman would end up introducing Intucell to AT&T, who would soon pay Intucell $50 million to use its technology.

Cisco announced it will buy all of Intucell’s business and operations for $475 million in cash and retention-based incentives. Cisco’s Service Provider Mobility Group SVP and general manager Kelly Ahuja explains: “The mobile network of the future must be able to scale intelligently to address growing and often unpredictable traffic patterns, while also enabling carriers to generate incremental revenue streams. Through the addition of Intucell’s industry-leading SON technology, Cisco’s service provider mobility portfolio provides operators with unparalleled network intelligence and the unique ability to not only accommodate exploding network traffic, but to profit from it.”

Bessemer Venture Partners’ returns from the sale will pay out to its “BVP VII” fund, the same one that backed Eloqua, Cornerstone, and Pinterest. Bessemer’s roadmap investment strategy centers around identifying a big market and then finding the right companies that address it. That’s why Goodman tells me BVP is “definitely on the hunt for more companies that have solutions” to the mobile data crunch.

For the full TechCrunch article click here.

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