Appstream is closing its Israeli R&D center and offering 40 of its 50 local employees jobs at its Palo Alto, California facility.
The company, which has raised $45 million since its establishment in 1999, employs another 40 people at its Silicon Valley headquarters. It develops technologies to improve the performance, manageability and scalability of Internet-enabled applications on connected or wireless devices.
Appstream's Israel manager, Avital HarShoshanim, explained that the company is reorganizing after concluding that merely reducing its cash-burn rate wasn't enough, under the adverse market conditions. "From our perspective, that meant bringing development closer to our market. Customers need a flexible organization that can meet their needs quickly," he said.
Maintaining the Israel branch involved high overhead, HarShoshanim said. The company preferred to cut overhead rather than production, which involved trimming development, service, marketing and so forth.
The goal of the cutbacks is to keep the company in money for two years of losses.
HarShoshanim says Appstream has $17 million left in hand.
Assuming that many of the 40 offered positions at Palo Alto prefer not to move to the States, the decision to close the Israel branch may ultimately result in a far tighter staff, even if the company is not saying so explicitly.
At its peak, Appstream employed 150 people, 80 in California and the rest in its Tel Aviv facility. Its investors included Goldman Sachs, Deutsche Banc Alex Brown, Intel Capital, Sun Microsystems, Computer Associates, Mitsubishi, as well as Israeli and American venture capital funds.
In May the company made the Upside list of the 100 hottest hi-tech companies.