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Pele-Phone Hooks up With Venture Funds to Find New Technologies and Investments

[Tel Aviv, ISRAEL] Pele-Phone, one of Israel's three mobile operators, is hooking up with four Israeli venture capital funds to locate mobile Internet start-ups to provide new, revenue-generating services - and maybe also investment opportunities.

The four funds involved are Jerusalem Global, Gemini, Apax Partners and Magnum Communications.

"We are going to cooperate with them in two ways," said Yossi Fait, Pele-Phone's vice president of business development. "The first is mutual deal flow: we will introduce startups who approach Pele-Phone to the funds, and they will introduce startups to us."

The kind of startups that Pele-Phone, which shares the Israeli mobile market with Partner (the Israeli licensee for Orange) and Cellcom, is looking for are those that enable the company to offer its subscribers new services to keep them from migrating to its rivals. Pele-Phone is also looking for methods of generating additional income at a time when revenues from voice alone are not enough to keep a mobile operator afloat.

Companies that are suitable will be able to beta test their products on Pele-Phone's subscriber base. Then Pele-Phone may or may not decided to take a stake.

"Our agreement [with them] will include a period of time where we can decide whether to invest in them or not," said Fait. "We need to learn about the company."

Four companies have already been found to fit these criterion. Fait would not divulge their names, but said that they have developed products in the fields of location-based services, cellular communities, cellular modems and a smart application for mobile Internet.

The first of these companies will be launching its services on the Pele-Phone public at the beginning of 2001.

The second aspect of the cooperation between Pele-Phone and the four venture funds is investment: the funds will also put money into those mobile Internet startups deemed worthy in a marketplace which is fast becoming crowded with contenders such as FolloWAP, Ayeca and Cellenium, to name but a few.

"Cellular technologies are a very important sector of the high tech industry today, " said Avraham Menachem, the partner in charge of CommLaunch, the Jerusalem Global venture fund which focuses on communications infrastructure. "This is why we have entered into cooperation with Pele-Phone."

"We get lots of Israeli startups coming to us," said Fait. "There is such hype now [in the mobile Internet field], really big hype. Some of them are worthwhile, some of them will disappear."



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