Smart Cities Need Smart Startups… and VCs

Smart cities are an increasingly hot topic. When I had the idea of holding an event about “data in the city” in Tel Aviv, together with our portfolio company ZenCity, we never imagined that over 200 people would register — with only a one week notice.

Noga Kap
i3 Equity Partners
4 min readNov 14, 2018

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We decided to host a meet-up with ZenCity’s CEO, Eyal Feder-Levy, and Abhi Nemani, Los Angeles’ first Chief Data Officer, who was in town after recently joining ZenCity’s Advisory Board.

We hosted the meet-up in trendy bar “Tailor-Made” better known amongst Tel-Avivians as a hotspot for partying rather than as a place to discuss the future of urbanism. But let’s say that this casual atmosphere is just a defining feature of the “Startup Nation.” Free beer and a meet-up event, and there we go: the evening was a success.

Abhi, Noga and Eyal

How can startups play a major role in smart cities? The main point of
the discussion was about how crucial startups dealing with open data are for local governments today, and the role of VCs as a bridge between the two ecosystems of big corporates and startups.

Today, growing cities face new challenges.
Mayors and their management teams have to understand and respond to their residents needs and priorities in terms of transportation, traffic, health, leisure, education, waste managementת sanitation, and more. Satisfaction forms, surveys and city hotlines fail to harness the tremendous amounts of ongoing data and citizen feedback out there.

This is where startups can step in, bringing technology solutions to solve big problems.
Over the past few years, entrepreneurs have realised the incredible power of clever data management. This is illustrated by a 3 year-old company ZenCity, dedicated to measuring what communities think. How do they operate? They just track residents’ feedback on a city-wide scale, gathering open data accessible on social media, news websites, municipal hotlines and
IoT sources.

ZenCity’s founders cracked the code for efficiently collecting and correlating
millions of data points, sorting and analysing them, and then turning this raw data into real-time, actionable insights using AI. This is a game-changer for municipalities, who can now prioritize resources, track performance and communicate their actions to the community. As CEO Eyal Feder-Levy explained during the meet-up,

“We have in our hands new means to optimize the quality of life in cities. We are now operating in 30 communities including major cities in Israel and in the US, like West Sacramento and San Antonio. And that’s just the beginning”.

This success story is just one example of the power of data analytics in city
management. ZenCity is bringing a key solution to growing communities and more projects will surely follow. Abhi Nemani spoke next. This brilliant young entrepreneur was the first Chief Data Officer for the city of Los Angeles and his work has been featured in the New York Times and Forbes, among others. He played a key role in creating powerful tools for American cities, building a nationally-recognized mayoral dashboard and leading data and analytics trainings for city staff. Abhi Nemani brings a real vision of city management through real-time, data-based insights.
In front of an attentive audience, Nemani explained that projects dedicated to better dataֿ management brought even more than efficiency. “Apps for non-profit and their implications in terms of management create a sense of community,” he stated frankly.

“People suddenly feel that the government cares for their daily issues. These projects must be backed by VCs in order
to exist and grow”.

The role of VCs is crucial to supporting startups’ inventions
ZenCity is now on a serious track to success. The young company has just raised $6M in a series-A round of funding from Vertex Ventures, Microsoft’s M12 venture fund, and Canaan Partners in Israel. But we should bear in mind that daring entrepreneurs need a team of investors to believe in their projects and give them the first “push.”
That is exactly what happened 2 years ago when i3 equity invested in ZenCity. As Eyal Feder- Levy said,

“Noga and i3 Equity opened the door to a select club of big multinational players, ready to support our project.”.

And that is i3 Equity’s mission to find seed-stage hidden gems. Here is how we proceed:

  • First, we provide the initial investment to the startups we believe in. We select startups in the IoT field. We are looking for talented teams able to blend technology and sector expertise in Industrial IoT, Cyber, Drones, Government Tech, Insurance, Agriculture, Smart City, Smart Home, Automotive, etc.
  • Second, we introduce them to a network of influential corporations — our partner- investors. Here, ZenCity met with key executives in Microsoft including CityNext’s department responsible for municipalities.The startup also took part in M12’s Innovate.AI competition. Not only did they end up winning the prize for the Israeli region, but they also received far more than expected.
  • Third: this step is an obvious one: the startup we support gains legitimacy and notoriety to other VCs and big corporates that may support its development in a larger scale.
    These kinds of connections which lead to the startup’s success are achievements we can be proud of.
    Following this process led us to invest in early-stage startups like Prisma Photonics (in the field of smart maintenance) and Nanofabrica (3D printing). Our next investment is surely maturing now in the minds of talented and ambitious entrepreneurs somewhere.

I am eager to spot the next startup that will solve real-world challenges and shape tomorrow’s everyday lives.

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