Israeli startup ZenCity is developing a technological solution designed to help municipalities understand the needs of their residents. The company this week announced the completion of a $1.7 million financing round led by Canaan Partners Israel, with participation from i3 Equity Partners, which is supportd by Microsoft Ventures, GE Ventures, Tata, Pitango Venture Capital, and others. CEO Eyal Feder-Levy and CTO Ido Ivri founded ZenCity two years ago.
Feder-Levy told "Globes," "In general, what we're doing is to help local authorities made decisions based on feedback from their residents. In contrast to commercial companies, whose emphasis is on the profit line, the test for the authorities is how satisfied the residents are. The various authorities are trying to measure satisfaction, but they are doing it under outmoded conditions, for example telephone surveys that contact only people with landlines and cover only 300 people. That's not necessarily a representative sample."
"Globes": Where do you fit into the picture?
Feder-Levy: "Our goal is to upgrade the measuring. We collect a wide range of information from as many residents as possible in real time through an automated analysis of social network conversations on the municipal call center and other sources. Our algorithms, based on machine learning, categorize the information in real time according to the municipality's fields of responsibility, derive the trends from the discourse, and detect with what people are satisfied and dissatisfied. This can help the authorities deal with an specific problem, for example garbage thrown in a certain place, but also to make song-term decisions. We collect information that already exists. These are conversations reaching the municipal call center and also information that we collect from public Facebook pages or Twitter accounts, without breaching the surfers' privacy. We have developed a machine language-based algorithm that helps us to enable decision-makers - the mayor, director general, and department heads - to understand the city as their residents perceive it."
The company has eight employees in Tel Aviv. ZenCity's product is already installed in more than 10 local authorities in Israel, including Tel Aviv, Ashdod, Ra'anana, Ramat Gan, and others. The company is also conducting a pilot in Paris.
How does it work?
"ZenCity is actually an artificial intelligence (AI) company that monitors information from the social networks, municipal call centers, and other sources. The company works on a software-as-a-service (SaaS) model, and charges each local authority thousands of dollars a month. The price is calculated according to the number of residents."
Does your product require the installing of sensors to collect the information?
"No. One of the problems of companies active in the smart cities sector is the need for very large investments that can reach $10 million. When the local authority is small or medium-sized, it in effect takes it out of the game. Such a local authority will not have a budget for installing traffic cameras, parking sensors, or air quality testing devices."
Have you worked with a small local authority?
"I visited a local authority in northern Israel. I arrived there after a three-hour trip, and showed them a demo of the product. One of the participants in the meeting told me 'It's all very well, but I don't need your system.' I think that the minimum threshold is 10,000-15,000 residents, but our product can also be suitable for a city with 500,000 residents."
What responses are you getting from the local authorities?
"We've met very committed people in all of the communities. They want to provide a better solution in their existing budget framework. We started marketing the product six months ago, and we already have agreements with more than 10 local authorities. I don't know how well you know the process of selling to such entities, but we're beating the statistics. It usually takes six months to sign agreements, and with us, it takes 2-2.5 months."
Do you seen any differences between different cities in Israel?
"Yes. There are enormous differences. One of the things we were worried about before we went on the air was that we would discover that all the cities are the same, or that the information we collect for each city would not differ from one day to another. These concerns have been completely disproved. We see cities in which there is a very negative discourse among the residents, while on the other hand, there are places where the residents are in love with the municipality. One of the things we'll develop later is the option of making comparisons - not between Netanya and Ashdod, but we will be able to compare Netanya to other cities with about 200,000 residents, and then create a benchmark that will let us know whether the city is functioning relatively well."
Do you have competitors?
"One genre that ostensibly competes with us is social media monitoring companies. They check how many times the name of a certain brand, say Coca Cola, is mentioned, and whether it was in a positive or negative context. This technology does not fulfill the municipalities' needs, among other things because there is no one keyword for a search. If you look for the word 'Paris,' for example, you can find information about a store in Ashdod named 'Paris My Love.' On the other hand, if someone publishes a report on Facebook about garbage on Narkiss Street, you'll never know about it. Our approach to gathering information is different."
Is it possible that you might report a nuisance to a municipality before it gets information about it from its own sources?
"Yes. It's possible for someone to write a tweet on Twitter without calling the call center. What's more interesting and exciting is that if three people call the municipal call center at the same time, it's likely that each of them will get a different receptionist, and no one will realize that a trend is involved. We take existing information and connect it by topic. We can say, 'Today there is 50% more discourse than usual about dirty streets,' and that needs addressing"
How did you come to work with Paris?
The Paris municipality last year invited startups to work with it in order to understand what the city's major challenges were. We submitted our candidacy, took part in a competition among about 100 startups, and won. They selected us to do a pilot, which is currently going ahead at full speed."
Commenting on the financing round, Canaan Partners Israel founder and general partner Ehud Levy said, "Smart cities has been one of the important and growing fields in recent years. According to the forecasts, the market will exceed $1 trillion by 2020. Within a short time, ZenCity has succeeded in building a product that many cities in Israel and around the world are already using, and which is currently affecting the lives of millions of people. The product is dramatically improving municipal management and the connection with the residents – the two main problems in the smart cities sector. We're confident that the company's unusually fine team will make the platform they have developed into a standard for municipal management all over the world in the coming years."
Published by Globes [online], Israel Business News - www.globes-online.com - on September 7, 2017
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