Israeli Startups Shine In The $92 Billion Cybersecurity Market
Gil PressSenior Contributor
Enterprise & Cloud
I write about technology, entrepreneurs and innovation.
Gil PressSenior Contributor
Enterprise & Cloud
I write about technology, entrepreneurs and innovation.
- Start-Up Nation Central. Another report, published today by Strategic Cyber Ventures, shows that Israel has surpassed China last year as the hottest spot for VC investments in cybersecurity companies outside of the US.
Start-Up Nation Central has also observed the increased participation by non-Israeli investors (most active were ClearSky Security Fund, Blumberg Capital, Boldstart Ventures, and Sequoia Capital) who were involved in 65% of investment deals and by corporate VCs (Intel Capital) who participated in 21% of deals. These investors, in addition to the local ones (most active were Glilot Capital Partners, Team8, 83North, JVP, OurCrowd and Elron Electronic Industries), helped fuel the growth of the cybersecurity sector in Israel to 450 local cybersecurity companies by the end of 2018, reinforced by the 47 multinational corporations with cybersecurity-related operations in Israel. From 2017 to 2018, the sector enjoyed an increase of 12% in revenues and 13% in the number of employees.
Cybersecurity Investments in Israel
START-UP NATION CENTRAL
The $1.19 billion investment in 2018 was a record-breaking amount for the fourth year in a row (and a five-fold increase since 2014) and was raised in 117 investment rounds (39% more deals than 2017). Israeli early-stage start-ups received larger Seed and Series A rounds than in the US. “This could indicate Israel’s competitive advantage in both the development of solutions based on deep technology, and that of more innovative solutions,” says Start-Up Nation Central.
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Cybersecurity Investments China/UK/Israel
STRATEGIC CYBER VENTURES
VC investments in cybersecurity outside the US increased 24% in 2018, according to Strategic Cyber Ventures, with Israel taking first place with about 35% of the total (these numbers do not include private equity, corporate, and private debt investments and exclude service firms and predominantly-hardware cybersecurity companies).
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The analysts at Strategic Cyber Ventures predict increased consolidation in the global cybersecurity market with established incumbents continuing to acquire startups: “The cybersecurity market is ripe for M&A in the coming years as publicly-traded cybersecurity companies are building up their balance sheets, looking to start-ups to drive innovation, and looking for a wider breadth of products to offer CISOs that are tired of deploying and maintaining new one-off solutions.”
Chief Information Security Officers (CISO) are also looking for products and services that will keep them one step ahead of attackers in a rapidly changing IT landscape. “The world of cyber today is often equated to an iceberg,” says Yonatan Striem-Amit, co-founder and CTO of Cybereason. “We see the top of the iceberg in common attacks, but advanced adversaries are constantly working beneath the surface and out of sight.” Israel’s competitive advantage is its human capital, the cybersecurity experts with deep and broad practical experience who “have a unique insight into what lies just below the water line,” Striem-Amit adds.
These unique insights drive the creation of new startups and new market segments, emerging with the evolution of cybersecurity and the larger IT environment. To address the cybersecurity skill-shortage, some startups are focusing on security orchestration, automation and response (SOAR) and optimizing the management of security operations centers, “to be better at connecting the dots,” says Striem-Amit. Last week, Palo Alto Networks announced its intention to acquire SOAR provider Demisto for $560 million, the largest exit for an Israeli cybersecurity startup since IBM acquired Trusteer for $800 million in 2013.
Another emerging market segment consists of startups “looking to bring attacker knowledge to the defenders, help them prepare for attack days,” says Striem-Amit. For example, Cymulate which offers a Breach and Attack Simulation (BAS) platform, and cyber-trainer CyberGym. Other startups are focusing on “next-generation computing platforms,” such as IoT, mobile, or connected cars. Firedome, which provides security for smart-home devices, announced last week that it has raised $4.5 million.
Last but not least are startups such as Cybereason, developing a comprehensive solution that anticipates both attackers’ new moves and IT’s new requirements over the next few years. IDC predicts that worldwide security spending in 2022 will reach $133.7 billion, 45% greater than the $92.1 billion spent in 2018.
This year, you can find out more about the Israeli cybersecurity ecosystem at the Israeli Cybersecurity Showcase at the RSA conference, March 4-8, and at CyberWeek in Tel-Aviv, June 23-27.
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https://www.forbes.com/sites/gilpre...92-billion-cybersecurity-market/#4a39454b451d
