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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