"This is a special place with a meticulous design. When you see the office, it looks like a start-up in Silicon Valley, and is quite special for a company like ours," Nielsen Company SVP global business development Bruce Haymes told "Globes" in describing Nielsen Innovate, the 90-year old company's recently launched incubator in Caesarea.
Nielsen Innovate is getting underway, 18 months have passed since the Chief Scientist approved it, and it has recruited six early-stage start-ups. Although the incubator bears Nielsen's name, it is actually a collaboration between the US television and Internet ratings giant, which owns 51% of the incubator, and Partam High Tech Ltd., the investment arm of real estate developer Igal Ahouvi, which owns the other 49%.
For Nielsen, the incubator is a reentry into Israeli high tech. The company has been active in Israel for years on the business side, providing retail sales data. Its Israeli operations merged with Hagal Hachadash a year ago. It previously acquired Israeli content analysis company Buzzmetrics for $100 million, but closed the development center based on the acquisition in 2009. Another entry attempt failed when Nielsen was underbid in the tender to establish an Internet habits measurements venture by Poland's Gemius SA.
What technology can Nielsen adopt to improve its quantitative analysis of data? One possible answer is connected to Zollo, which has developed a crowd-sourced location-based price comparison app for supermarkets using shoppers' pictures of their receipts.
"We've been in the data business for years, what people call big data. They way in which the data are organized and analyzed have changed over the years. We realized that in order to stay relevant in all the elements related to the field, we had to look at ideas from outside, and not just at in-house R&D," says Haymes. Asked why Nielsen set up shop in Israel, he said without hesitation, "Israel has the skills and innovation we feel that Nielsen needs as a company."
The first seeds of Neilsen's decision to open an incubator in Israel were planted in 2010, when Haymes' boss, Nielsen EVP global business development Itzhak Fisher, the top Israeli at the company, met Prime Minister Benjamin Netanyahu to review the idea. Fisher got the idea from his close friend Nir Tarlovsky, his former partner in RSL Communications and an owner of the incubator TheTime. Fisher came to Israel to seek relevant start-ups, with Tarlovsky acting as matchmaker. Fisher later met Partam High Tech CEO Esther Barak-Landes, who presented the company's wish to invest in an incubator, and the partnership was born.
Obtaining an incubator operating license from the Office of the Chief Scientist did not go smoothly. "It took us two years. We're a business that operates outside Israel, and when we submitted our candidacy, the Chief Scientist wanted to verify that we understood the program, the market, and that we'd be responsible for the funding we received from the government," says Haymes.
The incubator license was granted for the Haifa area, and Caesarea was chosen as the preferred site, a kind of midpoint for attracting students from the Technion Israel Institute of Technology in Haifa and from the Interdisciplinary Center Herzliya. Haymes admits, however, that the location made it initially difficult to attract start-ups. "Entrepreneurs felt it inconvenient to come because this was Caesarea. It's not Tel Aviv and there is nothing to do there. But one of the pleasant surprises is that the talk has changed to love of the place and a wish to stay," he says.
Barak-Landes, who serves as Nielsen Innovate's CEO, says that the waiting list for the incubator is quite long. "We've interviewed scores of companies in the past year. We encountered innovative ideas focused on data and consumer behavior, as well as outstanding entrepreneurs. So far, we've chosen six companies from all the candidates," she told "Globes".
Haymes and Barak-Landes explains that the incubator's rationale is to invest and foster six new companies a year, with each company staying at the incubator for two years. The big question is the added value that Nielsen offers start-ups which can choose among incubators, accelerators, or hubs located more conveniently and closer to central Israel.
"The value we give the companies today is the direct link between me and Nielsen's clients," explains Haymes. "It shows our clients that we care about them and that we want to connect them to innovation. In the other direction, the start-ups here benefit from a direct connection to the industry and the chance to run pilots."
Nielsen is building on the local success. "We're studying how the incubator works over time, and we may establish similar ventures elsewhere in the world. We may make a decision in the coming year," says Haymes.
How are start-ups chosen for the incubator? Although this is the million-dollar question, Haymes has a number of criteria. "We love ideas that solve problems in the contemporary market, and there aren’t many of those. The entrepreneur's strength and skills are also important. It's not just a matter of looking at good ideas, but also at the technology, and understanding whether there is a need for the company and if it has a market and how to make money from the idea," he says. "When I hear an idea for a start-up and I know immediately for whom it is suitable from among our clients, it's a sure pick for us."
3-front strategy for start-ups
Nielsen is playing on the start-up field on three fronts: it makes seed investments in ventures through Nielsen Innovate; it is a minority shareholder in Pereg Ventures, in which Fisher is also a partner; and directly through The Nielsen Company.
Fisher came to Nielsen through Buzzmetrics, and he is an investor and managing partner in Pereg Ventures. The firm has raised tens of millions of dollars for first and second-round investments in companies. "When the incubator's companies seek funding after the seed round, Pereg will have something to offer them," explains Haymes.
Haymes says that Nielsen makes 5-10 acquisitions a year. "This is part of our growth strategy. Our first concept here at the incubator is to help start-ups, and maybe acquire them down the road. It's too soon for that, but it's a serious direction."
Nielsen Innovate's first six start-ups
- Adstrix offers a customized xPlatform print-centered advertising service for small and micro businesses.
- cValue Ltd. - a collaborative marketing platform for retailers and brands for monetizing consumer insights and targeting goods to individual consumer.
- eDealya Ltd. - enables marketers to respond to social intent with an in-context, on-time, and relevant mobile advertisement.
- eVolita Ltd. - an automated tool for online business and market information research.
Revuze Ltd. - crowd-sourced online user reviews, personalized for shoppers to find the most suitable product.
Zollo - a crowd-sourced supermarket price comparison app.
Published by Globes [online], Israel business news - www.globes-online.com - on January 5, 2014
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