In a dream come true for Israeli high tech, Google has said it will buy traffic navigation start-up Waze — reportedly for $1.3 billion (£835 million).

With a staff of less than 100, Waze has become the staple sat-nav for 47 million people worldwide. Its free app transforms their smart phones into in-car navigators.

“We’re excited about the prospect of enhancing Google Maps with some of the traffic update features provided by Waze, and enhancing Waze with Google’s search capabilities,” Google said in a blog announcing the purchase.

Israel’s Prime Minister Benjamin Netanyahu telephoned the heads of Waze, and said: “Congratulations, you reached the goal! You put Israeli technology on the global map.”

A small group of Israeli entrepreneurs headed by CEO Noam Bardin set up Waze in 2008, deciding that normal sat-navs missed a trick in failing to get users involved. Their product gets users reporting traffic conditions, problems on the road and petrol prices, and relays their messages to others.

Leaders in the high-tech field have spoken of their delight. Roni Einav, who made Israeli history in 1999 when he sold New Dimension Software for a record $675 million, said: “I see it as an achievement that can give a lot of hope to youngsters and start-ups to do something meaningful — not just gaming, which is negligible in my eyes, but something like Waze that can really help people in their daily lives.”

The sale is widely expected to boost the confidence of foreign investors in Israeli start-ups. Asher Amado, an organiser of Tel Aviv’s upcoming Technology Exhibition, said: “Investors overseas will look at Israeli high-tech in a new light and give chances to new start-ups and new technologies.”

It is unclear how much Israel’s treasury stands to gain from the sale. Initial estimates were as high as £170m, but since it emerged that many shareholders live outside Israel, estimates range from £35m to £105m.