September 2020 - Monthly Insights Israeli Venture Capital
News & Updates
INDUSTRY SPOTLIGHT: CYBER-SECURITY
As technology continues to take center stage in our daily lives, the digital space has grown in complexity and so have the cyber threats and risks in the space. As awareness continues to rise along-side accelerated spending on the topic, Israel has emerged as a hotbed of innovation and has caught the attention of global investors. While Israel has produced some of the world’s leading cyber security companies over the past several decades, the likes of CheckPoint (CHKP), Cyberark (CYBR) and Varonis (VRNS), it has continued to assert its global dominance on the back of new startups founded by entrepreneurs with strong expertise in the cyber space developed during their service in the Israeli Defense Forces (IDF). Over the past few months and on the back of the COVID-19 pandemic, organizations have accelerated the research and application of cloud systems to modernize their previous antiquated systems for conducting business, further increasing their cyber vulnerabilities. Taking note of these changes, hackers have also increased their malicious activities during this period. According to a recent report by CheckPoint, COVID-19 related phishing and malware attacks increased dramatically from under 5,000 per week in February, to over 200,000 per week in late April. These dynamics have further accelerated the need for cyber security solutions. In the past several years, Israeli startups in the cyber-security space have strongly benefited from these trends as they managed to consistently raise capital year after year across numerous “mega rounds”, many of which have also resulted in significant exits. In 2019 alone, $1.88 billion was raised by cyber-security firms representing a CAGR of 56% since 2012 according to IVC-ZAG Tech Funding Report. In fact, in the same year, the cyber-security space has seen 12 mega rounds, including Cybereason, which raised a $200M series E round and SentinelOne (an UpWest Labs portfolio company) which raised a $120M series E round. Latest exits include Checkmarx, the global leader in software security solutions for enterprise software development, acquired by Hellman & Friedman for $1.15 billion and Armis Security, the leading agentless device security platform of IoT devices, acquired by Insight Partners and CapitalG for $1.1 billion.
Israeli cyber-security companies capital raising Source: IVC Online
Within the cyber space, we have seen Israeli startups remain agile and quickly pivot to the most pressing problems of the industry. Most recently, we have seen a shift to companies trying to understand the attack angles of cyber hackers and generate visibility into the “assets” of the enterprise. During January 2020, we invested in Cycognito, a company tackling these exact spaces by deploying a global bot network and sophisticated reconnaissance techniques at scale, allowing enterprises to continuously scan, map and fingerprint billions of digital assets all over the world in one dynamic platform. The recent $30 million B round of Cycognito was led by Accel along-side current investors Lightspeed Venture Partners, Amiti Ventures and Upwest Labs. Cycognito is led by two brilliant entrepreneurs, Rob Gurzeev (CEO) and Dima Potekhin (CTO). Both Rob and Dima have extensive experience in their domain, earned during their military service in the IDF’s top units and through their work in multiple cyber startups. We are proud to back Rob and Dima and look forward for great things to come.
Notable Investment Rounds
Redis Labs, a Viola Ventures portfolio company, secured a $100 million growth round co-led by Bain Capital and TCV Partners with the participation of Francisco Partners, Goldman Sachs, Dell Technologies and Viola Ventures. Redis Labs provides an in-memory database platform for applications and different services.
ProteanTecs, a Viola Ventures portfolio company, secured its series C round of $45 million led by Koch Disruptive Technologies with the participation of Viola Ventures and Astreides Management. proteanTecs has developed a cloud-based platform that combines data created in chip-embedded agents with machine learning in order to predict faults before they become failures.
Taranis, a Vertex Ventures and Viola Ventures portfolio company, secured its series C round of $30 million led by Vertex Growth with the participation of Viola Ventures, Vertex Ventures and Mitsubishi among others. Taranis offers a precision intelligence platform for agriculture that enables farmers to monitor their fields helping them to increase their yields and cut costs.
Nanox Visions (NASDAQ: NNOX) a Yozma Group portfolio company which develops nanotechnology-based X-ray emitters enabling novel 3D imaging systems with unmatched performance, raised $165 Million in its Initial Public Offering on the NASDAQ Stock Exchange on August 21 at $18 a share which valued the company $800 million.
Warner Music Group (NASDAQ: WMG), the American multinational entertainment and record label conglomerate, acquired IMGN Media for $90 million, a Rhodium portfolio company which is a media technology company that specializes in producing and programming social content for Gen Z audiences.
TikTok founder Zhang Yiming always imagined that he might build the world's next great tech company. But not this way. [The Wall Street Journal] Pinterest cancels huge SF office lease in unbuilt project, citing work-from-home shift. [San Francisco Chronicle] When the value of a stock skyrockets, how do you know if it's a permanent boom or a short-term bubble? It's a question that's flummoxed investors for hundreds of years. Just ask Isaac Newton. [The Atlantic] In the NFL, franchise valuations are skyrocketing to such a degree that the league's most popular teams may in effect be too big to sell—at least under current ownership rules. [Sportico]