Wonderful is growing like Wiz, but its business is very different
The Israeli AI startup has reached a $5 billion valuation and a $70 million revenue run rate in less than two years, but its economics look far less like those of a traditional software company.
Since the remarkable rise of Wiz, Israeli high-tech has not produced another capital-raising and revenue-growth machine on the scale of the cybersecurity company, which was eventually acquired by Google for $32 billion. Until now. Wonderful AI is beginning to look like the closest candidate.
Last week, Wonderful moved into a league occupied by very few Israeli companies, particularly those outside cybersecurity. Less than two years after its founding, the company raised $550 million at a $5 billion valuation, more than doubling the $2 billion valuation at which it raised capital just six months ago. Founded in early 2025 by Bar Winkler and Roey Lalazar, Wonderful has now raised more than $800 million.
But the funding numbers, extraordinary as they are, are not the most interesting part of the story. Wonderful has also achieved remarkable revenue growth, going from virtually no revenue a year ago to an annualized pace of about $70 million today. By the end of the year, that figure is expected to reach $100 million.
Wiz reached a $6 billion valuation roughly two years after its founding and hit $100 million in annual recurring revenue at the age of 18 months. Wonderful is now moving on a similarly steep trajectory, albeit with a very different business model.
So what explains the phenomenon, and is Wonderful emerging as Israel's standout AI company?
In Wiz's case, the formula was relatively easy to understand. Its founders had worked together at Microsoft, where they built the foundations of a cybersecurity platform before leaving to establish the company. Wonderful's story is considerably harder to define, partly because the company itself has changed so rapidly.
Wonderful initially identified a gap in the AI market: while the technology was developing rapidly in English-speaking markets, adoption was slower in countries where English was not the primary language. The company built a strong solution for voice-based call centers in languages other than English and expanded rapidly outside the United States.
Israeli consumers may already have interacted with Wonderful's technology without realizing it when calling the customer-service centers of Maccabi Health Services, Bank Leumi, Bezeq or Israel Electric Corporation.
But in its latest fundraising announcement, Wonderful presented itself in much broader terms, describing its offering as an "AI operating system" and making little mention of the voice call-center business that featured prominently in its pitch only a year ago.
People familiar with the company describe a rapid, and at times almost chaotic, evolution driven by the extraordinary pace of the AI revolution.
"Wonderful entered the strongest and largest organizations with interesting technology that was impressive for its time," says Uri Eliabayev, an artificial intelligence expert and consultant to companies on AI. "Later, they were able to build a strong marketing and sales organization, based on senior executives from well-known high-tech companies, and expanded rapidly.
"What was truly ingenious was that the people at Wonderful quickly realized that once they got their foot in the door of an organization, it needed more and more assistance and guidance in adopting AI. That's what the company is providing today."
That realization is central to understanding both Wonderful's rapid growth and its appetite for capital.
The company's primary product is, in effect, a workforce that helps organizations adopt AI, and it is an expensive workforce because it requires people with specialized AI expertise.
Two numbers that receive considerably less attention than the company's valuation illustrate the challenge.
The first is its headcount relative to its age and revenue. Wonderful already employs about 650 people, roughly half of them in Israel, and plans to triple its workforce within a year. About a month ago, it also announced plans to establish a center in Mumbai, where it expects to hire another 1,000 employees over the coming year.
The second number follows directly from the first. According to The Wall Street Journal, Wonderful's gross profit margin is about 52% of revenue. That is substantially below the 70%-90% gross margins typically associated with software companies.
Wonderful is therefore not a classic software-as-a-service company of the kind that dominated the technology market in recent years. It is closer to the increasingly important category of service-led software, in which software and human services are closely intertwined.
About 400 of Wonderful's 650 employees work at customer sites rather than from the company's own offices. Their job is to help implement AI agents and integrate them into organizations. In practice, they act as a bridge between the technology and the customer, identifying where AI can be deployed quickly and smoothly and then helping execute those projects.
That also gives Wonderful a potentially valuable advantage: its employees become deeply familiar with how an organization operates and where additional AI agents could be introduced. In that sense, the implementation workforce can also become a sales force.
The model has similarities to Palantir, which pioneered a service-heavy approach to deploying software, particularly in complex security and government projects. Palantir is now valued at roughly $400 billion. As AI adoption accelerates, the model is spreading, including in Israel, where startup Unframe is pursuing a similar approach.
The comparison may not be one Wonderful would embrace, but there is another historical parallel worth considering. In its early years, Amdocs was essentially a company built around "skulls", highly skilled professionals, many of them engineers, who were sent to customers struggling to adopt the internet and the new services it enabled.
That comparison helps explain the paradox at the heart of Wonderful.
On the one hand, the company is increasingly being valued as something closer to AI infrastructure than a conventional SaaS startup. Its ability to enter large organizations, help them adopt AI and then expand its role as their needs grow has allowed it to build revenue at extraordinary speed.
On the other hand, that model comes with high costs. Wonderful needs hundreds of employees to deliver its services, and it plans to add many more. That means the company will likely require substantial amounts of capital to sustain its expansion.
There is also a more fundamental question about how much of its current growth is being driven by its technology and how much by its pricing and willingness to deploy large teams at customer sites.
Some people familiar with the market argue that Wonderful is currently able to grow so quickly partly because it offers services at relatively low prices compared with established players such as Salesforce and Accenture. The comparison is reminiscent of Uber's early years, when venture capital helped subsidize prices and accelerate adoption before the company had to confront the economics of operating at scale.
That may be the most important question facing Wonderful as it enters its next phase: whether the company's extraordinary growth can eventually translate into the economics of a software company, or whether its AI ambitions will continue to require the cost structure of a services business.
