Active U.S & Israel Involvement in Later Stage Investment Yields Fast Success

Appilog was the provider of software for mapping and managing information technology (IT) assets throughout enterprises until its acquisition by Mercury Interactive (NASDAQ: MERQ) in July 2004, which was later acquired by HP.

The Opportunity Cedar Saw.
Cedar led the A Round investment in Appilog. When making its investment decision, Cedar was convinced that while Appilog did not have any customers yet, there is a clear market need for Appilog's unique technology and its solutions, providing real-time problem resolution capabilities to IT problems impacting organizations. Appilog’s “topology-based analysis” could inspect and identify problems and correlate events occurring on different technology stack layers, pin-pointing problems' causes, and minimizing user impact. Older generation approaches to this problem looked at the different IT areas as isolated silos, and could not provide intelligent correlation, or a “big picture” analysis. Appilog’s solutions provided the cross-reference ability and made this information available, in real-time, to the help desk staff of an enterprise, enabling better and more efficient customer service.

The Challenges Appilog Faced.
As any technology startup, Appilog faced its share of challenges and attempting to reach its target milestones.

• How to “go to market.” The company needed to form and communicate toits target market a clear message. It needed to articulate its offeringand its clear competitive advantage as it worked to win its firstcustomers and establish its market share.
  Appilog’s presence was split between its New York headquarters and its Israel-based R&D center. With Cedar’s team having local presence in both locations, Cedar was able to work on both sides of the Atlantic, locally, with Appilog’s respective teams. Cedar’s presence in New York and Boston allowed direct interaction between Appilog’s corporate, sales and marketing management and Cedar’s U.S.-based partners, while the Israel-based Cedar partners interacted more closely with Appilog’s technology center. Cedar helped Appilog form its go-to-market plan, helped clarify and communicate Appilog’s product roadmap and helped the CEO make key strategy decisions. Appilog’s ability to execute well on its clearly-defined strategy let it gain market share and made it an excellent acquisition target for Mercury Interactive within a relatively short time frame.
• Managing Growth. As Appilog grew its operations, Cedar’s team was aware of the additional talent that the company needed in order to continue growing. Cedar was instrumental in introducing candidates and helped recruit several key executives and senior level team members to Appilog, including its CFO, Mr. Iftah Ifhar.
• Steering towards an Exit. Cedar’s experience and insight came strongly into play as Appilog was gathering momentum. Recognizing industry trends and evaluating growth opportunities, Cedar’s team was instrumental in helping Appilog connect with Mercury’s team, and with helping the CEO negotiate the successful acquisition.
  When reflecting on the experience of working with Cedar, Mr. Irwin Wallach, Appilog’s CEO,summarized "Cedar Fund joined Appilog's investors as we initiated our go-to-market plan, and increased our sales efforts. Cedar proved itself a valuable and business-savvy partner to me as a CEO and to the management team, and provided active assistance and excellent advice on both strategy and direction."

The Exit
Mercury Interactive acquired Appilog in July 2004. Cedar Fund was the largest shareholder in Appilog at the time, making a significant return on an investment made less than two years earlier.