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Car safety co Mobileye raises $37m

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Friday, March 19th, 2010

As reported in IVC , Investors include Goldman Sachs, Leumi Partners, and Menorah Mivtachim.

Sources inform ”Globes” that Advanced Driver Assistance Systems (ADAS) developer Mobileye Inc. has raised $37 million from Israeli and foreign investors, at a company value of $740 million after money. Investors included Leumi Partners, which increased its stake in the company with an investment of $5 million, Goldman Sachs Group Inc. (NYSE: GS), which invested $10-15 million, and Menorah Mivtachim Holdings Ltd. (TASE: MORA). The financing round has increased the amount of capital raised by the company to $140 million
Mobileye was founded in 1999 and named as one of “Globes” most promising Israeli start-ups in 2006-07.

Mobileye president and CEO Zvi Aviram told “Globes”, “The financing round is the result of our wish to meet the strong demand in the market, because there are a lot of new customers. More than 70% of the vehicle industry has adopted our solutions. Paradoxically, over the past year we’ve doubled the number of customers, becoming the de facto industry standard. There are few competitors with the basic technology.”

Mobileye currently has 200 employees worldwide. To move forward, the company’s R&D center in Jerusalem will have to greatly expand.

Although the company value for the financing round was high by Israeli standards, especially in recent years, it should be seen in perspective. According to IVC, Mobileye had $25 million in sales in 2008, most of which came from the after-market segment, i.e. sales of the ADAS for installation in cars already on the road. Mobileye sells the systems to end-customers through vendors and distributors.

The bonanza, however, is the carmakers, which would install Mobileye’s systems as an integral part of their cars. Mobileye has announced three contracts, with BMW AG (DAX: BMW), Volvo AB (SAX: VOLV-A; VOLV-B), and General Motors Company (NYSE: GM). Although Mobileye has had sales since 2006, there has been little revenue from carmakers, because installation of the technology is slow by the industry. This could work in the company’s favor in the future; once the ADAS becomes standard equipment, it will be very hard to remove it.

Mobileye is building on this factor. It believes that it will see exponential revenue growth as it signs contracts with more carmakers to put the ADAS into their models. On a purely numbers basis, the company is ready for an IPO, especially on Wall Street, but its managers probably prefer postponing an offering until revenue jumps in a year or two, in order to get a higher company value. Alternatively, it may bring in a new financial or strategic partner, diluting current shareholders’ stakes, while strengthening its position.