Israeli startup Drivenets completed a huge $ 208 million fundraiser

Ido Susan and Hillel Kobrinsky recently completed a huge $ 208 million fundraiser for their startup, Drivenets, which has developed a solution that helps media companies increase surfing volume and maintain profitability. The start-up has benefited in the past year from the move to work from home, which has forced communications companies to deal with a huge volume of traffic, and invested in expanding their infrastructure.
Drivents was established in December 2015, and this is its second round of capital raising since its inception. The round was led by the D1 Capital Partners fund, which is its first investment in Israel. The Bessar and Pitango funds, which have already invested in the company in the past, participated in the round to maintain their holdings. The total capital raised for the company's coffers so far, including the current round, is $ 325 million, and the value in the current round has crossed the $ 1 billion mark. The round also included a scandalous component in which employees sold their shares - worth about $ 20 million - beyond the reported amount.
Drivents currently employs 320 people, three times the number of employees two years ago, and it is set to grow at a similar rate over the next two years. Most of its 220 employees are employed at the company's headquarters in Raanana, and its main branch outside Israel is New Jersey. It is also deployed in the rest of the United States, Europe, Japan and India. Over three years at the company, "meeting with money" by selling shares to investors in the same round.
D1, the new investor in Drivents, is a hedge fund managed by Dan Sandheim. The fund was established in February 2019 with an investment of $ 5.2 billion and reached phenomenal returns. The fund's latest reported asset value to the US Securities and Exchange Commission is $ 17 billion, and it holds shares in companies such as Microsoft, Expedia Caravan and Snowflake.
Drivents has developed a software solution that helps telecommunications companies increase the capacity of their networks at low costs, and deal with the erosion in profit margins resulting from the pricing of surfing wired networks to consumers. Today, companies set consumers' Internet accounts by speed rather than consumption, and have to deal with the huge increase in network traffic that has taken place in recent years. Consumers watch higher quality movies, consume streaming music services, and companies demand massive investments to enable this, but do not raise prices accordingly - thus eroding operating profits.
Increasing the capacity of the networks is done by purchasing huge and expensive software-integrated routers from companies such as Wawi and Cisco. Alternatively, Drivents offers a new way that allows communications companies to purchase "stupid" and cheap routers and maximize their capacity through centralized software that manages them from the outside. "Traditional companies know how to produce very expensive hardware," Susan explained, "while we offer a new architecture for network management, shifting the center of gravity from expensive hardware to cheap software."
Drivents' business model is itself innovative in the field and serves as a significant part of the value proposition it gives its customers - it is built on a fixed cost of using the software, regardless of the increase in data traffic. It signs contracts that guarantee an annual payment for several years - usually five years in advance. Its revenue rate (ARR figure, which is common in companies that sell software as a subscription and calculated according to the last month multiplied by 12) has doubled from year to year, and is now approaching $ 100 million.

Drivents' sales are considered complex
Drivents' sales are considered complex, and have traditionally been done head-on, but the pressure from the company's customers - infrastructure companies - to meet consumer bandwidth demand at Corona has also forced them to open up to new solutions immediately. Susan argues that the conversion ratio between session and transaction is not very different between a session done on a zoom and a physical session. "The corona is challenging and full of drawbacks, but this morning I have a conversation with Japan, lunch in Germany and an evening in the US - which I could not have done before without a lot of flights," he said.
Susan, the company's CEO, previously founded Intucell, which was sold to Cisco in 2013 for $ 475 million. The sale took place two years after the company was founded and after only $ 6 million was invested in it. Susan, who developed Intosell's technology, was then Aged 27. Over the years, the implementation of Intosel at Cisco has not been particularly successful, and it was sold in June 2020 for $ 50 million to Indian technology company HCL.
Kobrinsky, VP of Strategy for Driventes, is one of the founders of Interview, which developed solutions for conference calls to organizations. $ 121 million Intervis became the Israeli development center of AT&T and Kobrinsky served as the center's CEO.