"There are always surprises underground"

Exodigo team   credit: Eyal Toueg
Exodigo team credit: Eyal Toueg

Exodigo's technology doesn't come cheap, but not knowing what's under the surface can cost an infrastructure or mining company a great deal more.

According to all the forecasts, the fourth quarter of 2023 should have been the strongest for Israeli startup Exodigo since its founding. CEO Jeremy Suard readied his US salesforce for a blitz of six-figure deal signings. To oversee the company's North American expansion, he and his wife, who was eight months pregnant at the time, decided to leave Tel Aviv and move to Miami.

Six days later, the war in Israel broke out and Suard found himself in a whirlwind that no one in the company had dreamed of. 60 of the company's 80 employees were called up to reserve duty - most to special forces and the engineering corps - including half the company's management. Suard himself was also called up. He boarded the first plane to Israel, leaving his wife behind, and transferred management of US sales to the local vice president with a clear directive: keep selling as usual, but ask each new customer to defer delivery, as there was no-one to talk to in Israel.

"The craziest quarter"

Suard was discharged after two and a half months of reserve duty. During that time, he tried to figure out which of his workers were available to come back, and save the contracts that had begun to pile up. One staffer, Amit Shahar, fell in January of this year while serving in the Yahalom combat engineering unit, in an incident in which explosives loaded onto a truck detonated.

Meanwhile, during this difficult period, one of the most active venture capital firms in the past year, Greenfield Partners, headed by Shay Grinfeld and Yuda Doron , made an investment offer. Greenfield was impressed by the number of deals that had come in, even after October 7, and, within a few weeks, Exodigo’s previous investors also opened their pockets. Oren Zeev's venture capital fund, one of the first investors in the company, asked to participate in leading the new round as well -- a rarity in the high-tech investment world. "It was the craziest quarter I've ever experienced," Suard tells "Globes." "We had huge contracts. I was sure our customers were going to cancel because we couldn't provide service when the war broke out. Exodigo could have died then, but they waited for us. Some even waited a quarter."

What helped clients to stay patient was the fact that they were mainly government corporations: railways, metros, and power infrastructure companies whose attitude was guided by the Biden administration’s warmth in the early stages of the war. One such customer is infrastructure firm HNTB which, among other things, is planning intercity railway projects in California and New York.

Exodigo has developed a system that scans and maps the subsoil at construction sites and infrastructures. Real estate developers or railway executives can save millions of dollars, and months of delays, by correctly mapping the areas intended for construction, paving, or laying track. Too often, power cables, water, and gas pipes not found on the original blueprints can delay construction projects, and make them more expensive, sometimes even leading to lawsuits against the developers.

Exodigo's service can cost hundreds of thousands of dollars, but the savings on delays and legal processes encourage developers to start construction only after proper underground mapping. "We locate twice as many objects as those drawn on the maps," says Suard. "There are always surprises below ground. You come to lay cables for the infrastructure, and discover a pipe in the wrong place. Just updating plans can take months, and expose the developer to lawsuits from contractors who can’t start work."

A workforce of IDF officers

Exodigo belongs to a new wave of companies founded by former IDF personnel who, since Operation Protective Edge, have had experience with challenges such as locating underground tunnels and clearing mines. Exodigo’s founders don’t refer directly to their military backgrounds, but the fact that the company employs dozens of former intelligence unit and engineering corps experts in various areas of specialization such as sensors, software, hardware, signal processing and physics - as well as intensive involvement in cyber and subsurface technologies - indicates they know a thing or two about the subject.

Suard was born in France and immigrated to Israel at the age of 15 with his family, which settled in Ashdod. He was accepted into the IDF Academic Reserve, graduated with a bachelor's degree in physics from the Hebrew University of Jerusalem, served eight years in the technology unit of the 81st Intelligence Corps, and was awarded the Israel Defense Award, the Chief of Staff Medal of Appreciation for Technology, and the President's Excellence Award for undisclosed achievements within the defense establishment

Exodigo is not your usual start-up. Its workers walk under the blazing sun pushing carts equipped with seismic, radar, and sonar sensors, and launch drones with highly sensitive cameras into the sky. Experts from a variety of fields sit at screens, each responsible for aggregating data streaming from the dozens of sensors, and converting it into an artificial intelligence-based model that understands precisely what is hiding underground and where it is located. It’s an expensive, labor-intensive activity, not suitable for most Israeli venture capitalists looking to invest mainly in fast-growing cyber or cloud-based software companies.

"I’m not sure that it would be easy to raise money for this company today," says Suard. "But in 2021, there was a feeling that it was easier to do, and investors were open to new areas. Our presentation gave the impression of an expensive company with many costs, but also a strong team. We said that if it works, it’ll really work."

In fact, this strong team, mostly comprising officers from IDF units 81 and 8200, could have developed any product it wanted and raised capital for it. The original group considered targeting the life sciences sector, utilizing their expertise in signal processing and complex land, air, and water systems, to create a single device integrating ultrasound and MRI. Working out of a storeroom in Ramat Hahayal, they developed various products for half a year. Upon the insistence of a good friend that one of their applications would also solve the challenge of finding oil, they concluded that in matters related to the bowels of the earth - whether in the civilian or military sector - there were more unknowns than knowns.

In a presentation put together in just a few days, the founders stated they wanted to solve two challenges for two huge markets: oil discovery, and subsurface mapping at construction sites to avoid hazards. They recruited fifteen military veterans, including special unit intelligence officers, and a few days later managed to raise their first seed round of $13 million, led by Oren Zeev’s Zeev Ventures, and Yahal Zilka’s 10D VC, joined by JIBE Ventures, Assaf Jacobi’s seed investment fund.

An unpopular business model

Developing this "subsurface X-ray" requires efforts that most Israeli startups, working mainly in an air-conditioned office, don’t have to make. To develop their smart scanning engine, Exodigo purchased hundreds of sensors from the mining, industrial, automotive, and space industries for millions of dollars to assemble them into a field scanning kit that includes a Matrice industrial drone, five hand carts, and one trailer. A camera and four other sensors were installed on each cart to pick up different signals that were merged to create a better picture of what lies hidden underground. This information was then cross-checked with engineering plans from public or customer databases, and with data from online maps and satellite images processed with computer vision algorithms.

In the next stage, Israeli government companies were enlisted to train the scanning model. In preparation for construction of the new Jerusalem light rail lines, Exodigo assisted in mapping the location of infrastructures and graves, which helped in planning and building the track route. This process also helped the company to identify the best sensors on the market for each application, to locate the cheapest and best suppliers, and to miniaturize the scanner to make it cheaper and better than the one currently in use, which costs about $1.5 million.

Although Exodigo generates of tens of millions of dollars in annual revenue, its business model is not popular with high-tech investors: providing service in the field by sending teams to remote locations to scan areas day and night, sometimes blocking roads and intersections for hours at a time. Simply reducing the size of the scan kit will transform Exodigo from a company that provides an expensive service, to a product company that markets its kits to thousands of contractors. A smaller, more portable kit that should cost no more than $30,000 will pave the way for Exodigo to become a large and profitable company, which it is still far from being today.

Among the companies that use Exodigo’s services are Israel Electric Corp., NTA Metropolitan Mass Transit System, Israel Natural Gas Lines, Jerusalem Light Rail, Netivei Israel - National Transport Infrastructure Co., Trans Israel, Ayalon Highways Co., Eilat Ashkelon Pipeline Company (EAPC), Mekorot Israel National Water Co., as well as the engineering planning and management company Waxman Govrin Geva Engineering. Outside of Israel, Exodigo serves energy giants such as National Grid, Pacific Gas and Electric (PG&E), the national gas companies of Italy and France, transport and metro authorities in the USA including LA Metro and Houston METRO, High Speed 2 (HS2), which is Great Britain’s largest railway project, as well as collaborations with engineering planning companies such as HNTB, AECOM, HDR Group, Vinci, and Colas Rail.

Oren Zeev, one of the top Israeli investors in Silicon Valley, and an early investor in companies such as Houzz, Tipalti, and TripActions (now Navan), had the opportunity to meet the founders during their first funding round in 2021, along with 10D. His reasons for investing then also brought him to lead the most recent round . "Exodigo has all the ingredients to build a major company," he told "Globes." "The market is huge because every construction project needs to know what’s happening underground, so the market is seemingly unlimited. And this is even before taking into account other markets, like mining. Even now, the company has not yet realized the full potential of the real estate sector, it’s only active in the infrastructure niche. The value that it brings to the large projects that it takes on is clear and proven. The cost of the unknown is higher, and the company has proved to enough customers that it can save them a fortune."

Concurrent with its expansion into the real estate market, where it can map soil strata at construction sites and distinguish between layers of clay, sand, and water, the company already has plans to enter the mining sector, where can assist in locating minerals, water, and metals used in automotive production, or even gold. Mining in outer space, which has attracted companies such as SpaceX, Blue Origin, and Virgin Galactic, as well as venture capital funds such as Koshla Ventures and Andreessen Horowitz, has also fired the imagination of Exodigo’s managers, who are considering how to support subsurface mapping of asteroids and moons.

The competitor that maps remotely

Exodigo is not alone in the underground mapping sector. Like other technology branches, this field is dominated by Israeli companies, thanks in part to the expertise developed by many Israelis in military service. Another prominent subsurface utility mapping solutions company is 4M Analytics, which manages operations from its Tel Aviv office, and does not go out into the field. 4M, which has so far raised $75 million from funds such as Insight Partners and Viola Ventures, aims to be -- as expressed by its executives -- "the Google Maps" of the underground." So far, 4M has mapped the below-ground utilities infrastructure in seven US states: Texas, California, New York, Colorado, Georgia, and Washington, and intends to complete all 50 states in the coming years.

4M software specializes in collecting data from visible and partially visible sources such as construction plans, infrastructure company blueprints, aerial and satellite photographs, and infers missing information using artificial intelligence models and smart mapping. Like Exodigo, it produces maps of underground infrastructures that include power and telecommunications lines, water pipes, sewers, and gas pipes, up to their point of connection to buildings, which the company does not enter. Unlike Exodigo, 4M does not provide labor-intensive scanning services, and therefore does not require road closures. According to its management, all mapping work is conducted "from the office in Tel Aviv," covering hundreds of miles in the US, daily.

The company was founded by Itzik Malka , former owner of 4M Defense, a landmine clearance and Explosive Ordnance Disposal (EOD) company, and Yoav Cohen , a former senior IDF officer in visual intelligence (VISINT). They were joined by data specialists from companies like ZipRecruiter, Trax Retail, and Bizzabo. The company has signed contracts with five US transport authorities to provide their transportation companies with underground data before they execute infrastructure projects. In the long term, the company intends to automate the planning process fully, and conceives of an engine that can plan the infrastructure layout by itself.

Exodigo is a heavier company, as it provides scanning services in the field, but that kind of work gives greater confidence to planners. For that reason, Exodigo has also managed to close larger deals than has 4M Analytics, but it suffers from losses as a result. For growth to continue, it needs to become based on product sales to contractors and developers, and not on providing services.

Exodigo took first place in the "Globes" Most Promising Startups of 2024 rankings. 

Published by Globes, Israel business news - en.globes.co.il - on April 24, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Exodigo team   credit: Eyal Toueg
Exodigo team credit: Eyal Toueg
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