from the March 2008 issue

eBay unit pays $169m for Israeli start-up FraudSciences

FraudSciences, which develops fraud detection and protection products, registered its first sales at the end of 2006.

Israeli fraud detection software start-up FraudSciences Corp. has been acquired by eBay Inc. (Nasdaq: EBAY) subsidiary PayPal for $169 million. FraudSciences, which was founded in 2001, raised $7 million from BRM Capital, which holds a 40% stake, angel investor Guy Gamzu, and Redpoint Ventures of the US. The company, which had its first sales at the end of 2006, will remain in Israel and become PayPal's local R&D center.

FraudSciences began marketing its products about a year ago. The company was founded by chief scientist Saar Wilf and CTO Shvat Shaked. Wilf was formerly CFO at online payment solutions provider Trivnet Ltd. and has extensive experience in the field. Shaked, also a former Trivnet executive is an expert in e-commerce, web-based information security, and software and telecommunications systems. He owns patents on a series of user identification, electronic payment, and fraud detection technologies. Both founders served in classified technology divisions in the Israeli army.

Wilf and Shaked said that we have been given a rare opportunity to work with an exceptional group of talented people.

Sources report that Wilf and Shaked will receive $20 million each following the acquisition. BRM has made a handsome twelve fold return on its investment making almost $70 million on an investment of $5 million.

This will be eBay's second Israeli acquisition, after it bought out in 2005, whose system provides price comparison solutions, for $634 million.

Reprinted from the Israel High-Tech & Investment Report March 2008

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