Is it me or does it seem that Israeli startups are hotter than a stolen tamale? IBM (IBM) announces it’s buying ANOTHER Israeli startup. This time its FilesX, a company providing data recovery and back-up solutions for business continuity. This is on top of Big Blue’s purchase of XIV earlier this year. It does seem on the back of IBM’s activity and AOL’s (TWX) that Israel M&A is heating up — at the startup level.

Eze Vidra has a very good post over at VC Cafe entitled “The Golden Age? Israeli Startups Experience Funding Streak“. According to Vidra, “In 2007, Israeli venture capital funds raised a total of $1.1 billion (including venture lending), 21% more than in 2006″. The industry is expecting a slow down on the fund raising side in 2008 and the article shows some good analysis about what may happen to these flush companies and funds in the future.

The same article mentions that M&A activity involving Israeli companies that were either acquired or merged totaled $3.2 billion in 2007 in 75 deals – the second highest number of M&A deals in any one year to date. I find that stat interesting. Outside of ECI Telecom and Gilat (GILT) getting bought out last week, the M&A activity for the publicly-traded Israeli companies that we follow has been kind of quiet.

For now, Barron’s prediction that Check Point (CHKP) will get bought by IBM is just speculation.

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We recently got a chance to sit down with Jon Medved, a rock-star in the Israeli tech world, to discuss his new startup. This interview appeared as part of our new subscription newsletter, Israel Opportunity Investor. You can find out more about the product and the opportunities we cover at www.israelnewsletter.com

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Jon, can you tell us what Vringo’s all about?
Jon Medved: It’s not just a company story; it’s a story about trends. The trend is personalization 2.0. The big bonanza which most investors missed, myself included, was ringtones. If you were pitching VCs a ringtone company in 1999,you wouldn’t have even been able to get a meeting. You would have been shooed out. The ringtone business has been a goldmine for those investors who got it. Now, it’s a $6 billion business worldwide. It’s becoming a major source of revenue for the music labels. Take Universal Music Group, for example. Music star, Akon, recently sold a batch of 11 million ringtones. And unlike iTunes, which sells songs for $.99, these ringtones go for $2.

It’s the drive for human expression to want to stand out in a crowd, to personalize things, to make them mine. Just like Jibbetz does for Crocs shoes, allowing you essentially to pimp your shoes, like wearing a T-shirt with a slogan on it, or slapping a bumper sticker on your car — Vringo is doing the same thing for the phone. (Continue »)

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