Earlier this year, management consultancy firm McKinsey & Company acquired Tel-Aviv based AI company Iguazio. The move marks the firm’s first acquisition of an Israeli company and is indicative of both the start-up nation’s tech prowess as well as the significant potential value of AI for businesses.
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To thrive in today’s competitive business market, it is essential to harness the power of AI as it continues to transform the way we live and work.
Iguazio, a leader in AI and machine learning, aims to realize the business potential of AI by helping companies to manage, accelerate and scale their AI deployments-an area in which many companies struggle.
Senior partner and Global Leader of McKinsey & Company Analytics Alliances and Acquisitions Ben Ellencweig notes: “According to McKinsey research, more than $490 billion was invested in AI by organizations around the globe from 2012 to 2021. But most business leaders are still struggling to translate these investments into concrete returns, with only 10 percent of AI projects actually emerging from the lab and succeeding in real business environments.”
Ellencweig says that McKinsey plans to use Iguazio’s technology platform, and team of 70 data scientists and AI experts to strengthen McKinsey’s AI arm QuantumBlack in order to drive further impact for its clients. He notes that the partnership is “extremely meaningful” for Mckinsey. “This is one of the first product companies we have acquired and our first acquisition in Israel, with more to come.”
Asaf Somekh, CEO and co-founder of Iguazio, says: “As a start-up, we had a limited reach in terms of our availability to get to the kind of clients and projects we wanted but working with McKinsey will mean access to a wider pool of clients than we could have ever dreamed of, and more resources.”
He continues, “McKinsey’s experience and QuantumBlack’s technology stack and expertise, now coupled with Iguazio, is the ultimate solution for enterprises looking to scale AI initiatives in a way that directly impacts their bottom line. We’re thrilled to join the McKinsey family and embark on this next chapter for Iguazio.”
With Iguazio, companies are able to run AI models in real time, deploy them anywhere, and thus bring to life their most ambitious, AI-driven, business strategies. Iguazio is used by businesses across a range of sectors to generate value faster by using AI to both accelerate the path to production and continuously roll out new AI services.
Ellencweig, based in New York, continues: “We analyzed more than 1,000 AI companies worldwide and identified Iguazio as the best fit to significantly accelerate our AI offering- from the initial concept to production- in a simplified, scalable and automated manner.”
Iguazio was founded eight years ago by Israelis Asaf Somekh, Yaron Haviv, Yaron Segev, and Orit Nissan-Messing. The foursome have been working together since 2001, both in their own start-ups and across multiple organizations. Their combined expertise have helped develop some of the core technologies of enterprise analytics and AI.
Since the founding of Iguazio, it has added dozens of well-known companies to its portfolio. These include NetApp, Ecolab, and LATAM Airlines Group. LATAM selected the Iguazio MLOps (machine learning operations) platform in order to operationalise a large-scale, cross-company AI innovation project as part of their post-pandemic innovation strategy.
From an employee perspective, the acquisition deal essentially doubles McKinsey’s presence in Israel, with the opening of a QuantumBlacks Labs R&D Center- one of now five global hubs. “It shows the huge potential and talent of the start-up nation and we are very proud to have one in Israel.”
Working with Iguazio, QuantumBlack will be able to immediately provide clients with industry-specific AI solutions that are twice as reliable, five times more productive, and eight times faster from proof-of-concept to production.
Somekh notes: “So far AI has been seen as a luxury of the tech giants (Google, Facebook etc) but it can go far beyond this.”
“It can enable enterprise level and mid-market businesses to be more efficient and there is also huge potential for it to be used for tech for good, and other good causes.”
Somekh is clearly not alone in seeing the potential of AI. Iguazio is currently backed by a string of prominent investors including Pitango, JVP, Magma VC, INcapital Ventures, Kensington Capital Partners, Verizon Ventures, CME Group, Bosch, Samsung and Dell.
The McKinsey acquisition deal is a further nod to the potential of Iguazio, as well as the wider Israeli tech ecosystem, which had a difficult 2022 amid the global economic shutdown. In 2022, investments in Israel’s tech sector dropped by nearly half.
Somekh notes that “Israel is part of the global tech industry and sees the same trends that you see all over. 2022 was tough and 2023 started tough. You can see some recovery but when you look at funding for start-ups, it’s still super tough. It’s not as it was in 2021 when people were standing in line waiting to invest.”
However Iguazio, which was able to keep eits entire team in the acquisition, is optimistic about the future. “The potential is huge and we have now access to the top clients.”