The first quarter of 2021 turned out to be a record-breaking one for Israel's cyber sector, with a number of startups in the cyber field raising a combined $1.5 billion in 17 separate deals.
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The $1.5 billion raised places Israel in second place worldwide in terms of investment, with only the US seeing a greater amount raised in the same period.
The fruitful first quarter of 2021 came on the heels of record investment in Israeli startups over the course of 2020 – which despite the COVID pandemic saw Israeli ventures raise $2.9 billion – 31% of all startup investment globally for that year.
Israel also stands out for its number of "unicorn" startups, private ventures valued at $1 billion or more. In fact, 50% (11) of all cyber unicorns are based in Israel. The US is home to another eight, followed by one unicorn each in China, Ireland, and Switzerland.
One of the most successful fundraising rounds by an Israeli startup in Q1 was secured by Orca Security, which in March 2021 closed a $210 million Series C round to bring its valuation to $1.2 billion – a mere two years after it was founded.
According to Orca Security co-founder Gil Geron, "Israeli entrepreneurs have starting building larger companies and for developing markets – for example, the the cloud security market that we operate in, which within three years will be worth about $11 billion."
Geron says that "this combination leads to more investment in Israeli cyber [ventures] because of its huge potential. We see maturation in this sector through very experienced Israeli players who know how to pick the right market in which to operate, realize its potential, and create the next huge companies in the various fields in the cyber sector. Foreign investors understand that too."
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Kobi Samboursky, founding partner at Glilot Capital, which has been investing in Israeli cyber ventures for 10 years, explains that "We we've seen throughout this past decade are cyber companies that eventually see exits and are acquired by major technology companies, mostly foreign ones. This past year, we've see that trend reverse itself. More cyber companies see themselves as here for the long term, to become really big."
Pavel Gurevich, CEO of Guardicore, offers another perspective: "The intensive investment we're seeing is a direct result of damage and risk that is occurring because of a lack of defenses. In the last quarter, we saw bigger ransomware attacks demands that ever. One was for $50 million as a result of the attack on computer manufacturer Acer."
Guardicore is considered an undisclosed unicorn, and when it announces its next fundraising round, will be valued at over $1 billion.
"The Israeli cyber sector is turning into a global success story because Israeli-global companies are bringing the security solution needed to the market," Gurevich says, adding that even the disruption caused by COVID "accelerated Israeli cyber development not only in terms of demand for security solutions, but also in terms of sales."
