Sequoia-Backed Kenshoo Moves to San Francisco

v6qj2gUber-VC Mike Mortiz has a new BFF, and he’s moving to Silicon Valley. It’s Yoav Izhar-Prato, the co-founder and CEO of Kenshoo, an Israeli start-up that gives companies and advertising firms tools and services to manage sophisticated search campaigns. Sequoia invested in 2007,  and Moritz has taken a personal shine to the company, according to many sources. “Search is untapped,” the Google investor declared when they were evaluating the deal. And apparently Kenshoo’s technology was “tapping” it better than the local competitor Marin Software, which sources say Sequoia passed on.

Sequoia doubled down on Kenshoo with a second round last March. That round came with a healthy valuation, a 50% premium over the previous funding.

Moritz isn’t alone. Kenshoo is one of the hottest companies in Israel. It’s already turned down two smallish acquisition offers and was the buzz of the investors and corporate Internet folks at Kinnernet. One executive said, “Google will buy them for $150 million to $200 hundred million once they figure out they need them.” There were nods all around.

Sequoia helped Kenshoo shift from a professional full-service model to more of a simple-to-use, cheaper-to-deliver software-as-a-service play. No doubt Sequoia can also help advise on the potentially thorny situation Kenshoo is in now that its biggest partner (Google) has acquired its biggest competitor (DoubleClick).

Moritz also advised Izhar-Prato to focus more on the U.S. market, hence the move. There’s a knock that Israeli entrepreneurs are only good at tech, but Izhar-Prato is actually a sales guy and apparently a pretty good one. When I met with him in Israel in April he told me the company was managing $20 million in U.S. search advertising budgets. He said they were managing more than $100 million total, but he also said that number was doubling every few months and that was a few months ago. Competitor Marin Software says it manages $300 million.  But, hey, Marin doesn’t include Zappos in that impressive tally anymore. Kenshoo stole them.

And yes, Zappos is also Sequoia-backed. A good number of haters have noted that a lot of Kenshoo’s high profile U.S. customers are Sequoia-backed companies, suggesting that Kenshoo didn’t exactly earn the business. But isn’t that just the so-called “value add” of having connected investors? You think Sequoia didn’t play a role in the Google-YouTube deal?

Regardless, no start-up is going to pay a company that doesn’t deliver. Indeed, Alfred Lin, of Zappos, says the company was asked to check out Kenshoo, but their technology won the business, period. He says Zappos is discovering a whole long tail of keywords it wouldn’t have otherwise.

Lin, Moritz and crew are at a fancy party that started about two minutes ago to welcome Kenshoo to its new headquarters. I was invited…on Izhar-Prato’s provision that I behave. (Whatever that is.) I’ll update the post with anything new I learn.

Update: Look at what Moritz wrote on the wall: