Where will the next billion-dollar startups come from? The tech world and most VCs tend to be parochial, looking at Silicon Valley, maybe New York, and a few other hot markets like China and Brazil. But what about the Old Country?

Yesterday, I was having coffee with Saul Klein, a partner at Index Ventures and co-founder of Seedcamp. He believes that in every major city across Europe, Russia, and Israel, there are “a legion of companies that are capable of achieving billion dollar valuations and in some cases are likely to be able to do close to a billion dollars in revenues over the next 3 to 5 years.”

I asked him to name five while I pointed my iPhone video camera at him, and he was able to give me a much longer laundry list , which I’ve added below (along with some others he sent me afterwards). I’ve indicated which ones are Index investments and where each one was originally founded. Which of these will get into the billion-dollar club? (Note that some of these already are billion-dollar companies. You can click through to their Crunchbase profiles to learn more about each one).

Skype (London, Index)
Playfish (London, Index)
Wonga (London)
ASOS (London, Index)
Mind Candy (London Index)
Net-a-Porter (London, Index)
Betfair (London, Index)
Klarna (Stockholm)
Spotify (Stockholm)
Wix (Tel Aviv)
Conduit (Tel Aviv)
Fon (Madrid, Index)
Privalia (Barcelona, Index)
Criteo (Paris, Index)
Vente-Privee (Paris)
SoundCloud (Berlin, Index)
LogMeIn (Budapest)
AVG Technologies (Prague)
Kaspersky Lab (Moscow)
Ozon (Russia, Index)
Yandex (Moscow)
Mail.ru (Moscow)

Founded in 2006, Wix provides a simple mechanism for anyone to create Flash-based websites. Users can customize their Wix websites with a drag and drop editing tool and pretty templates, making the site user-friendly for users who may not be tech savvy. The site makes its money from a freemium model where users pay for extra customization and design features.

Over the course of 2010 Wix, which has nine million users, has doubled in size and the company added a West-coast branch to its existing Tel Aviv and New York offices. To date, Wix has developed 8.5 million individual sites.

But making a big bet on flash websites is a risk when you consider mobile. Many companies are scrapping Flash all together and betting on HTML5. Wix founder and CEO Avishai Abrahami tells us that Flash is the best platform for websites being viewed on PCs and other computers but that Wix will be rolling out a mobile site creator in the next few months, which will leverage HTML5 technology for mobile devices (a.k.a. will work on iOS devices). The company is also launching a Facebook application that allows users to integrate Wix websites with their fan pages.

The new funding will be used towards Wix’s new social and mobile product launches in the coming months. Wix faces competition from Weebly and Yola.

For the past two years I’ve been holding onto the belief that Israeli entrepreneurs should devote particular focus on the opportunities available to products and services that cater to Small & Medium Sized Businesses (SMBs). Slowly but surely, more and more companies have indeed started targeting this space, the most notable being Kampyle, SohoOS, and Clarizen.

Today, Chicago-based but Israeli-founded Future Simple is announcing a $1.1M round led OCA Ventures with participation by the I2A Fund, as well as angel investors.

Founded in 2009 by Uzi Shmilovici, Future Simple has already launched two SMB products: PipeJump, a small business CRM, and QuoteBase, a project/job quote generator that is claiming thousands of users. The investment will be used to bolster the management team, market the current products, as well as develop additional ones.

As an interesting side-note that proves yet again that startup entrepreneurship is (a wonderful) disease, Shmilovici was co-founder at Netcraft, an Israeli design firm that was acquired by a local portal last year. His co-founder at Netcraft, Joey Simhon, is today co-founder and CTO at Do@, a stealth startup which Robert Scoble noted on Quora: “[the] first company since Siri that makes me think that search still can be greatly improved on mobile will launch a compelling new mobile search product.”

Last time I was in Cape Town, I was hanging out with Vinny Lingham, founder of Yola, a service that allows small businesses to create a site in about five minutes. He was incredibly spazzy about some big deal he was about to close that would have a material effect on the company, but he wouldn’t tell me what it was. That’s OK I think I found out anyway.

It’s HP, according to these screenshots below, and that’s a whale. HP sells two computers per second or more than 60 million computers a year, according to HP Executive Vice President Todd Bradley.

I asked Lingham about the screenshots, and he said he couldn’t comment aside from confirming he had a “relationship” with HP and that it’s not limited to the US. He wouldn’t confirm which countries but did say that Yola will soon be available with seven payment currencies and in six additional languages: Spanish, French, Portuguese, Italian and German.

HP’s sweet spot is not-so-tech-savvy small businesses, and now they’ve got a Yola install icon on their desktops. I hear that Yola beat out large competitors like Intuit’s Homestead to win the deal, not to mention other startup competitors.

While digging, I also heard that Yola has signed a distribution deal with AOL to be part of AOL’s Product Central along with other third party software providers like McAfee. (It’s not on the site now, because I’m told it kicks off in 2011.) Lingham confirmed that deal too, but wouldn’t give me any more details about it.

Yola’s market is a hard one to reach but a surprisingly juicy one. Believe it or not, nearly half of small businesses still don’t have a Web site. At some point that will change; the big question is how long it takes. Small businesses are notoriously late technology adopters. For more than decade Intuit’s biggest competitor for products like QuickBooks has been pen-and-paper and basic Excel files. That’s why distribution deals by brands small businesses trust are the only real option to build a larget company, aside from amassing a huge feet-on-the-street sales force. Considering Intuit is one of the most trusted small business software brands on the planet it’s surprising and impressive that Yola beat them out for the HP deal.

It’s possible that the wave of Groupon-like coupon sites and services like Foursquare could push Web-holdouts online faster in the next year. And unlike Yola’s Israeli competitor Wix, Lingham bet on HTML-5 over Flash– a crucial differentiator in the iPad/iPhone world. I wouldn’t be surprised to see a venture round for Yola in 2011 too.

But the amazing thing is, when it comes to small business software, the market is still pretty wide open, with most businesses still running themselves on pen-and-paper or Excel spreadsheets. There is a reason that Intuit has managed to keep a stranglehold on small business software—because it is hard to build and even harder to market to such a huge, fragmented market with so many different needs. Especially when the revenues per customer are necessarily puny.

So, it’s a huge market but, let’s face it, it’s not a sexy one. And that’s one reason a company like Yola doesn’t get more press. (Here’s our previous coverage.)

I hung out with Yola’s founder Vinny Lingham while I was in Cape Town last week and came away impressed for a few reasons. For one thing, this guy has forgotten more about acquiring traffic than a lot of people in Silicon Valley know. (I originally published those verbs backwards. Thanks commenters and apologies, Lingham. I blame jetlag.) He spent the bulk of his career building search campaigns for huge multinational companies and made a pretty sweet living at it. (Check out his BMW convertible in the video below–those cost about double in Cape Town.)

That business was lucrative, but Lingham soon saw what many entrepreneurs in emerging markets are realizing: Services companies don’t scale the way product companies do. And Lingham wants to build a big company. A big company helping small businesses build Web sites.

You may be thinking, doesn’t everyone who wants a Web site have one by now? Astonishingly, no. Yola has a few competitors—most notably Y Combinator graduate Weebly and Israel’s hometown darling Wix. (Lingham–who carries his iPad everywhere–is quick to point out Wix is Flash-based, while Yola bet on HTML5.) But ultimately, this is a business that will be won on distribution not necessarily product, and Lingham is pretty relentless when it comes to bringing people to his site and converting them.

Here’s the other thing notable about Lingham: He really wants Cape Town to be a tech hub. He moved to Silicon Valley to get greater access to deals, talent and money, but he returns to Cape Town several times a year and invests in and mentors companies there. I’ve written before that one of the reasons India has gotten so much US venture capital is because of the Indians who made it in the Valley and were determined—either out of nationalism or opportunity—to pay that forward to the home country. I’ve also theorized that the paucity of huge, Brazilian-born startup successes in the Valley is a big reason that Valley VCs largely ignore Brazil and South American generally. Simply put: No one is hounding them to go. The famed Israeli Web investor Yossi Vardi calls it “profitable patriotism.”

To Lingham, success is Yola becoming a billion dollar business. But equally success is Cape Town giving rise to lots of other successes. I don’t mean to suggest he’s alone in this effort. I was in Cape Town last week to speak at an excellent conference on African Web entrepreneurship called Net Prophet where more than 800 people crowded in a hall to share ideas and absorb advice from those like Lingham. Still, how much of a difference can one guy make? In my experience traveling to more than a dozen markets in the last year, one guy (or girl) can make more of a difference than most well-meaning government institutions. Good entrepreneurs need role models, mentorship and angels more than any other raw materials.

Here’s a short video I shot with Lingham on the way to the airport my last day in town. (Yeah it gets dark, get over it. I’m on the road.) We talk about the Silicon Cape initiative, why you should care about small business software and how his wife feels about him spending all his money on startups.

Founded in 2006, Wix provides a simple mechanism for anyone to create Flash-based websites and widgets without losing SEO juice. Users can customize their Wix websites with a drag and drop editing tool and pretty templates, making the site user-friendly for users who may not be tech savvy. The funding will be used for further product development.

The site makes its money from a freemium model where users pay for extra customization and design features. And Wix is partnering with other design and image sites to include compelling features for website building. For example, Wix has partnered with stock image site Fotolia to give users access to the site’s 5 million images. Wix is growing and currently has 3.5 million free users with 400,000 new users joining per month. The site faces competition from Weebly Sprout, Yola, and others.

Here’s an example of a website created using Wix.

Today, Wix announced that it raised a $3.5 million series B round From Mangrove Capital Partners and Bessemer Venture Partners. The Israeli startup offers a Web-based Flash editor for making artful widgets and Websites, but without losing any SEO juice. (I’ve embedded two examples below).

The service has been showing some healthy growth since it launched in public beta last June. Co-CEO Allon Bloch tells me that Wix just crossed the 200,000-user mark, and is adding between 2,000 and 3,000 a day. These users are creating 2,000 new Web pages and widgets every day (the split is about 75/25 in favor of full-blown Web pages on MySpace and elsewhere).

In September, says Bloch, Wix content across the Web generated 20 million pageviews, up from 13 million in August. (Only a small fraction of that was on Wix.com itself). The U.S. makes up 50 percent of traffic. After that, the biggest countries for Wix are France, the UK, Brazil, and Canada.

Boch has a simple business plan: charge $5 to $10 a month for premium features that appeal to businesses and designers such as removing the Wix logo and letting them connect the Web pages to their domains.

http://static.wix.com/client/app.swf
Free MySpace Comments – Wix.com

http://static.wix.com/client/app.swf
Flash Widgets – Wix.com

Here is a round-up of the 6 Israeli companies that presented on stage:

Registered Investment Advisors (RIA’s) typically provide advice to individuals with assets of $500K and above on average. The alternative to individuals with less assets are mutual funds which lack in transparencies (what your money is invested in) and individual attention (you get to talk to customer service reps, not the fund manager). Personalria wants to change all this by bringing the same high-end advice and investment transparency “rich folks” get to “ordinary folks” with much fewer assets to invest, say $10K.

The Personalria platform requires buy-in from both users and RIA’s. Users are required to open a brokerage trading account at Ameritrade or eTrade, for example, in order to use the Personalria service. RIA’s will need to create profiles describing their education, experience, etc.

The big question is whether the company can pull off the chicken-and-the-egg challenge, meaning, getting a critical mass of users and RIA’s that make it worthwhile for each group to join. The judges on the panel also noted the challenges the company will face in customer acquisition and the density of competition, both offline and online such as Cake Financial (a company that launched at last year’s TC40).

AlfaBetic has developed a propriety language translation engine based on statistical machine translation and human QA to translate English to Spanish, French, German and Portuguese.

The service is initially being targeted at bloggers which can provide AlfaBetic an RSS feed that will then be translated and consequently monetized globally. Their engine will do most of the work, but human intervention is used to edit and proof every piece of content. The engine employs domain language templates such as technology, sports and finance. These are improved over time through machine learning and as a result of the human QA.

The company’s planned business model requires it to provide the translated content to portals and then the selling of ads against it. This will be “non-intelligent” targeting, i.e. basic demographics, sponsorship, etc.

Panel judges Om Malik & Tim O’Riley were asked whether they would use the service and indicated they would not use a translation model. Instead they would opt for a full-blown localized operation such as fr.techcrunch.com.

The story of Tweegee begins in Israel where the company is active as Tipo.co.il, a kids community site with 800K monthly uniques (out of a total population of 1.2M kids aged 8-14).

TechCrunch50 marks the company’s launch of its American play—Tweegee.com—a social network aimed at being MySpace for kids aged 8-14. Positioned as a destination site, TweeGee is intended to offer tweens a safe environment to express themselves and interact with others in their age group.

The site offers email with a feature called WordUp, a patent pending application which works in a very similar manner to T9, but attuned to the 8-14 age group with relevant blacklisted words and such. Kids can also use a calendar app, build avatars, play multiplayer games and create their Zones which are websites built on Flash and HTML.

One of the big challenges the company will face is an issue panel judge Ron Conway raised and that is how to get gain a share of the time kids are already spending online in places such as ClubPenguin. Curiously, the company is adamant about not widgetizing its offering.

Next week the company will launch a Russian version called Tvidi.ru , the result of a partnership with Russian Media company RBC which paid $6M for 50% of the license. A Turkish version is in the works.

MytTopia wants to reduce the headaches and costs associated with developing games for mobile phones by allowing developers to write code once and have it immediately ported to all available smartphones and mobile operating systems.

The company’s solution—similar to that of Mo’Minis—is a Rich Content Authoring Environment called RUGS which utilizes a customized Eclipse-based IDE. Developers can use this environment to develop any number of mobile game applications without any platform-specific knowledge such as Symbian, PlamOS, or iPhone SDK. The application designer works independently of the programmer to design the app skin & layout—the code remains the same.

MyTopia claims that a single cross-platform game developed on RUGS required one developer four weeks at a cost of $50K, while it would cost $1M using current development methods.

MyTopia is also running a game destination site called MyTopia Online which was considered a distraction by the panel of judges.

Think of devunity’s collaborative coding platform as Google Docs for code. The key pain point it is trying to solve is providing developers the ability to interact with fellow developers in real time, thereby creating a “healthier” development process which would theoretically reduce dev costs.

devunity’s fully functioning code editor currently supports Python, PHP, ASP, Javascripts, CSS, and HTML. It also sports built-in integrated APIs such as BOSS, Google Apps Engine, Digg, Flickr, Facebook, etc. The code is completely exportable, meaning, devunity does not lock you in to having them host the app.

There’s also no need to worry about versioning issues such as waiting for other developers to check-in code—devunity does all of this in real time. It also allows the developers to create discussions right on top of the code and gain additional visibility by way of a mini feed which is automatically created for each project.

The company is aiming for a two pronged business model approach. The first is a service play where developers would pay for usage based on a subscription model. The second is a white label approach where companies can form their own devunity environment. An interesting example for the latter would be to allow an outside development firm to use devunity in order to work and interact along side an in-house dev team.

plaYce believes there’s a gap between high-end and casual games, where the former is expensive and might not give you the bang for your buck you expect, and the latter being free but flat in game graphic quality.

plaYce is attempting to bridge this gap through a propriety graphics rendering technology that requires no-download yet still delivers high graphics quality and fast frame rate, right within the browser. While still restricted to IE—it requires a DirectX plugin—the company claims the technology will be applicable on other browsers and is optimized for low-end computers. It is also able to recreate dense scenarios streamed over slow web connections.

The company has no intent to develop the games itself, rather it sees itself as both platform and publisher. It intends to lure independent game developers by offering them what it calls “Game Infrastructure as a Service” which would include everything from the game infrastructure to user acquisition.

The major challenge for plaYce will be to find 2-3 killer games that will bring the critical mass of users necessary to attract game developers to the platform.

For more information on plaYce, see John Biggs’ post, here.

DemoPit Companies:

Founded by Nir Ofir, a co-founder at BlogTV, iamnews is taking a crowed-sourced approach to the newsroom. Once news tasks are created, reporters from around can contribute into them. This can include pure textual content, photos and videos. The platform handles the entire process, from task creation to management of the contributions. With the newspaper business continuing to struggle, a solution such as iamnews can help them deliver quicker news more cheaply. (Iamnews was voted the best DemoPit company, and became the last TC50 finalist to present onstage).

ConTrust provides a real-time UGC moderation platform able to identify content threats including profanity, pornography, racism and brand abuse. It is then able to block these threats according to a set of pre-defined customized levels. The company also claims their platform protects against traditional security threats such as spam, phishing, and malware.

Joongel considers itself a platform for the creation of web-based toolbars. These are toolbar “strips” in the header area of a web page that require neither download nor installation. Site publishers can use Joongel to offer a search engine aggregator or a vertical search engine for travel, video, cooking, etc. The motivation for publishers is mainly through monetization via affiliation and ad rev-share.

Update: A prominent angel investor walking the TC50 DemoPit has expressed interest in investing in the company.

Exhibitor Companies:

2Pad is a web service that integrates with your email service—currently limited to Windows Live, AOL, Gmail, MobileME and IMAP service providers—in order to mine it for pictures and videos. 2Pad then automatically tags them with the email’s subject, sender, recipient—all of which are then available as filters. The service is very similar to xoopit with the major difference being that 2Pad does not require an installation.

Delver has developed a search engine designed to uncover knowledge and information that exists in users’ social graphs. Delver is packaging themselves as both a destination site and a white label solution for intra social network search.

Payoneer provides a payment solution for web-business that utilizes MasterCard debit cards to facilitate the actual payment at the end point. While similar in concept to PayPal, Payoneer sees itself more of a complement than competition in the sense that it can bring its expertise in international payments into the PayPal ecosystem—an area PayPal is generally considered as lacking.

The company recently closed an $8M Series B round from Greylock and Carmel Ventures.

Wix offers a webtop publishing platform for the creation of Flash-based websites, social network profiles, comments and more. (Disclosure: I advised the company in the past).

Wix, the browser-based designer that lets users create Flash-based widgets and full-scale webpages, has launched in public beta. The site specializes in creating colorful Flash pages without requiring any coding, and seems to appeal most to “MySpacers” looking to add some flair to their sites (Wix does have some more professional templates for businesses). You can see our original review of the site here.

One of the common concerns about Flash websites is that they don’t play nice with search engines, leading to lower page traffic. Wix says it can get around this by generating an XML map for each of their sites that is SEO friendly. Since the launch of its private beta, the company says that they’ve seen a surprisingly high number of users using the designer to create full-fledged sites rather than basic widgets, which makes this search optimization especially important.

Wix sees general competition from a number of other browser-based website designers, which include Weebly and Synthasite, but is most similar to Sprout, another Flash-based widget designer.

When I reviewed Wix last week, I called it cluttered and candy-coated. The promotional video below shows a tamer, yet still very colorful, side of the service.

Get your account here.

Cluttered and candy-coated are two ways to describe Wix, a new Flash-based website and widget creation tool that we’ve been anticipating for months. It’s also feature-rich, very well-designed, and – sorry – still in private beta.

Wix joins a multitude of browser-based website creators such as Weebly, Synthasite, and Google Pages. But it reminds me the most of Sprout, a widget-creation tool that can also be used to make websites, since both provide fluid Flash interfaces that appeal to your inner designer.

Both of these companies are blurring the line between content that’s meant to stand alone as distinct websites, and content that’s meant for syndication over blogs, social networks, and other destinations. It’s because of this obfuscation that they’ve opted to use the unspecific, yet self-referential, names “sprout” and “wix” when referring to their creations.

Whereas Sprout is mainly marketed as a tool for spreading media content, Wix most certainly appeals to a younger population that’s obsessed with expressing themselves online (call them MySpacers, if you will). Wix does have a collection of tasteful business themes, but the vast majority of its templates are for fun and fall into categories like “street art”, “emo”, “playground”, and “sexy”.

Once you pick a theme for your new website (or widget, just depending on your dimensions), you are taken to a popup Wix Editor that provides you with an overwhelming number of ways to spice up your creation. You can add shapes, clipart, photos, videos, songs and animations; you can tweak colors and set visual effects for user behavior; and you can add text paragraphs and headlines. Photos can be uploaded manually or pulled in from either Flickr or a royalty-free stock collection; videos can be embedded from YouTube; and there’s also a collection of free song clips that can be used in a range of skinnable music players.

Each wix supports multiple pages with links between them. When you want to edit a particular object on a page, you click on it and options for rotating, resizing, and positioning are revealed. A Mac OS-looking doc at the bottom of the screen also provides icons for setting effects, behaviors, animations, and more. You really need to play around with Wix to fully appreciate how much flair and how many customization options it affords.

As you work on your wix, you can hit a preview button to see what it will look like. And once you’re done with it, you can publish it either as a website hosted on the wix.com domain or as a widget to be embedded or sent to friends via email.

One of the major complaints many have about Flash is that it doesn’t allow for indexing by search engines. Wix gets around this by producing content that’s a hybrid of HTML and Flash, despite the fact that it’s editor is entirely Flash-based. This will be a huge benefit to anyone who uses Wix to set up a serious website, but it probably won’t make any difference to widget creators.

Update: Wix is giving out a couple hundred private beta invites to readers who email info@wix.com with requests.

It reminds me a lot of Geocities back in the day (remember?), perhaps because of the colorful backgrounds and chaotic mess that results when you create a page. Lots of people created Geocities pages, added a picture, a little text, a guest book and a website counter, and that was their home page. No one visited more than once, though, since the page lacked fresh content.

And that was waaaaay before the days of social networking and the explosion of blogs. Today people have a lot more to do on the web except read news, buy stuff at Amazon and send a few emails. Glogster either needs to find a way to widgetize this in a way that gets MySpacers and Facebookers excited (see Slide, RockYou, etc.), or they will likely stay a ghost town. Strike that, even with a reasonable widget strategy, I doubt Glogster has a very bright future. Frankly, it isn’t as good as Scrapblog, which targets the same niche and launched nearly a year ago.

People remain enamored with Flash as an environment to create websites, though. Wix, an Israeli startup in private beta that is doing something in this area, is getting good reviews from people who’ve seen it (we still haven’t). We’ll see if they have a business model that breaks out of the Geocities ghetto.

Glogster is giving away some iPods and gift certificates to new users who create posters and satisfy a set of too-complicated-for-me-to-read rules. So if you’ve got some time and lack an iPod, there you go. See Download Squad and Go2Web2 for their take on Glogster.

Israel-based Wix.com is a new entrant that is entering into private beta now. It claims to allow users to create Flash-based websites without any programing skills, and publish those sites anywhere on the web. The output can also be widgetized and published on social networks.

We have not been able to test the service directly yet. But a source that did see it called it “awesome.” And if it helps people build flexible, useful Flash applications without any programming skills, someone here in California just may pick them up sooner or later.

Sign up on their home page for the private beta.