Israeli AI Startup Razor Labs Bypasses VC Route, Instead Going Public on Tel Aviv Stock Exchange
AI startups based in Israel have had little difficulty raising venture funding. Some are now following the lead of their U.S. counterparts by going public.
Among the first is industrial AI specialist Razor Labs, which also raised $36 million while launching an initial public offering on the Tel Aviv Stock Exchange, operating with the ticker symbol TASE: RZR. It claims to be the first Israeli AI startup to go public on the Tel Aviv exchange.
While the IPO illustrates the strides made by Israeli AI startups—among them Intel-acquired Habana Labs and no-code AI developer Noogata—market trackers note that the Tel Aviv exchange lacks the market influence of, say, the tech-heavy Nasdaq exchange.
Founded in 2016, Razor Labs also is among the growing list of AI vendors focused on adding intelligence to industrial machinery. Its neural network technology uses deep learning algorithms to automate business and industrial processes.
The AI startup’s flagship DataMind AI platform is designed to add intelligence to heavy industrial machinery. The cloud-based platform operates as a software service, linking remotely with machine sensors to streamline manufacturing steps while predicting equipment malfunctions.
The AI platform’s predictive maintenance capability detects patterns in sensor data to alert operators to potential failures.
Prior to its IPO, Razor Labs’ co-founder and CEO, Roz Roditi, said the AI startup operated in “bootstrap mode,” expanding without third-party investments while generating revenue from sales. Indeed, the company claims to be one of the few technology startups in the region to launch an IPO without significant venture funding.
It has since raised $36 million since offering stock in February, claiming a market valuation of more than $150 million. The new funds will be used to expand R&D and its global footprint. It also has an office in Australia.
The company’s leadership team includes co-founder Ido Rozenberg, a veteran AI researcher who previously served as a commander with the 8200 intelligence corps unit of the Israeli Defense Forces.
Citing the company’s positive cash flow, Roditi said the decision to go public rather than the venture funding route takes Razor Labs “off the beaten path” of rounding up investors, boosting its valuation, then launching an IPO.
According to technology market tracker IVC Data and Insights, Israeli tech funding remains robust, with more than 151 deals during the third quarter of 2020 worth $2.74 billion. That total represents a 24 percent year-on-year increase.
While Razor Labs is unique as the first AI startup on the Tel Aviv exchange, “TASE was never a favorable or rewarding stock exchange for startups,” said IVC analyst Batya Felman.