SPACInsider contributor Matt Cianci this week compiled his three favorite potential SPAC targets in Israel’s technology industry. We look at why they are compelling and why each could be a fit for a blank-check merger.
SPACs have largely been an American phenomenon and of the 88 SPAC deals struck in 2021, 83% of all were with a target headquartered in the United States. But, among the international deals, Israel has become an unlikely leader as host to four of the 15 international companies targeted by SPACs.
If one counts transactions with companies founded in Israel, but later headquartered elsewhere such as eToro (NASDAQ:FTCV), Payoneer (NASDAQ:FTOC) and Taboola (NYSE:IACA), the country has spawned 39% of all international deals with US-listed SPACs this year.
That is an astounding amount of activity for a country of 9 million people, but also shows how SPACs have become the chosen vehicle to get companies from Israel’s over-looked tech scene onto a major exchange.
The country is far from picked-over as well. Unicorn ride-hailing app Via was also founded in Israel’s “Silicon Wadi” as well as workforce software firm Monday.com. But, both of these companies are well-known and have already publicly discussed IPO plans.
A bit further off the beaten path is Taranis. It is an agritech firm that uses satellite imagery and both drone and manned fly-overs to provide high-resolution visibility of crops to make track growth and make swift interventions upon early signs of poor conditions.
Taranis is already overseeing millions of acres of farmland in the North and South America, Europe and Australia. With its compendium of global satellite images, even freshly new clients gain access to eight years-worth of imaging history on their farmland to help build a baseline and assemble predictive models for weather and other conditions.
Its offerings drill down from that macro view to imaging that achieves resolution of 0.1mm per pixel to count individual insects on leaves. All of this gets built into a software suite able to tell farmers when is the best time to water, fertilize, harvest, or make other adjustments.
The company has only raised $59.6 million in outside funding since its 2014 founding, but that is a similar mark hit by satellite imaging company BlackSky, which raised $50 million since 2013 and received a $1.1 billion valuation in its pending combination with Osprey (NYSE:SFTW).
The money flowing into Taranis has been of the smart and strategic variety as well. Its 2018 Series B included participation by Canadian fertilizer company Nutrien and the venture arms of Japanese conglomerate Sumitomo, and agricultural chemicals manufacturer Wilbur Ellis. Its $30 million Series C in July 2020 meanwhile drew in the venture arms of Malaysian conglomerate Kuok Group and the Singapore Investment Corporation.
Israel’s low-moisture climate has forced its agricultural sector to focus on precision farming to eliminate water waste, but the innovations developed there could meaningfully contribute to sustainability goals in other environments.
Wiliot has developed the first battery free Bluetooth sticker, which has potential applications in a number of sectors.
These stickers can take a range of readings on temperature and location, giving them a potential mass market in retail, food and beverage and healthcare. Retailers will be able to track inventory with it, while the temperatures of medications and food can be monitored. Wiliot stickers can also tell if a circuit is broken or measure the consistency of a liquid.
Each sticker, which is roughly the size of a postage stamp, contains a chip with antennae that operate for seconds at a time with RAM, ROM and flash memory. It uses ambient radio and telecom waves to power it for the short bursts of information it needs to give out.
The second generation of Wiliot’s stickers shipping in 2021 are expected to cost between 10 and 50 cents each, with the third generation expected to cost single-digit pennies.
Wiliot has raised $89 million since its 2017 founding, drawing investment from Samsung (KRX:005930), Verizon (NYSE:VZ), Qualcomm (NASDAQ:QCOM), Maersk (CO:MAERSKB), PepsiCo (NASDAQ:PEP) and Amazon Web Services.
Through these strategic investors, Wiliot has had time to play with potential use cases in a variety of scenarios and also see what kind of analytics can be derived from plugging all these data points into a cloud.
Wiliot may soon be handing off the baton to Trigo once inventory reaches stores. As product companies continue to balance whether to have an Amazon channel strategy or an anti-Amazon strategy, grocery stores similarly have to consider how to survive once the footprint of AmazonGo stores expands.
AmazonGo has about 29 stores at the moment and the format remains limited, but their selling point provides the potential to expand rapidly once the technology has been fully worked out. At such locations, customers with the AmazonGo app can simply choose their items and walk out of the store, forgoing a traditional checkout with the cost of goods billed to them after the fact.
Trigo is among the independent technology players aimed at preventing Amazon (NASDAQ:AMZN) from gaining a monopoly on this innovation. Unlike Amazon’s model, Trigo uses ceiling-mounted cameras to track customers with AI-tools that map the store and determine what each customer has chosen so it can bill them as they leave.
In some ways, this is similar to Evolv Technology, which uses AI tools to create touchless security screenings at event venues. Both companies have developed their technology suite but not fully commercialized their rollouts.
Evolv announced a $1.3 billion combination with NewHold (NASDAQ:NHIC) once it had de-risked with a handful of contracts signed. Trigo could follow a similar path as its technology is currently being tested by Tesco, one of the UK’s leading grocers.
Tesco was also an investor in Trigo’s $60 million Series B in December, indicating the company may be at an inflection point soon.
While some of the previous SPAC combinations with Israeli tech targets involved teams specifically looking at country’s tech scene, there is no shortage of tech SPACs looking for companies that might not have already fielded a SPAC call or two.
Technology is the target focus for 99 of the 437 SPACs currently searching (excluding fintech, proptech and biotech). Nonetheless, Moringa (NASDAQ:MACA) and ION 2 (NYSE:IACB.U) raised $115 million and $253 million, respectively in their February IPOs to specifically look at the Israeli tech market. Both have officers with experience in the market and the ION 2 team is nearing close on its first deal in the sphere with Taboola.