Cybersecurity firm Check Point Software Technologies Ltd. announced on Thursday that it is acquiring Israeli-founded startup Perimeter 81 for about $490 million in a cash-free, debt-free deal, to bolster its security tools for remote and hybrid workers.
The deal value marks a large discount to Perimeter’s $1 billion valuation only 14 months ago when the Tel Aviv-based startup raised $100 million from a Series C funding round, bestowing upon its unicorn status. The end of the era of cheap money amid rising interest rates, surging inflation, and a slowdown in the global economy have roiled global markets over the past year triggering a tumbling in tech valuations.
Founded in 2018, Perimeter 81 develops network cybersecurity solutions for the hybrid workforce on its cloud-based platform. The company says its solutions support decentralized, hybrid workplaces without the “cyber complexity that hurts IT’s ability to defend corporate cloud and on-prem[ises] network.” The startup works with 3,000 customers globally, including Fortune 500 businesses and industry leaders in a range of sectors.
The network cybersecurity solution “allows remote users to benefit from fast, secure internet browsing everywhere they go, while addressing cloud privacy violations,” Check Point said.
Network security is a serious threat for businesses and organizations as hybrid work has become a standard since the COVID-19 pandemic, and the digital transformation is shifting data centers to the cloud opening up more channels for sophisticated ransomware, malware attacks and other breaches.
Nasdaq-traded Check Point, which has a market value of more than $15 billion, said the acquisition and the integration of the startup’s security tools will offer “secure access across remote users, sites, cloud, datacentres, and the internet.”
“With the advent of hybrid work and the rise of cloud transformation, the demand for security services that expand beyond the network perimeter is increasing,” said Check Point CEO Gil Shwed. “By leveraging Perimeter 81’s capabilities and integrating them into the Check Point Infinity platform we continue with our vision to deliver the best security through comprehensive, collaborative and consolidated solutions.”
The market for secure access service edge (SASE) solutions is expected to grow to more than $20 billion by 2026, according to a report by Gartner cited by Check Point.
Perimeter 81’s last funding round in June 2022 was led by B Capital, an international investment outfit founded in 2015 by Eduardo Saverin, who also co-founded Facebook alongside Mark Zuckerberg and other university roommates at Harvard University in 2004. To date, Perimeter 81 has raised about $165 million. With headquarters in Tel Aviv and offices in Los Angeles and New York, the company employs about 250 people worldwide.
Check Point said the acquisition, which is subject to customary closing conditions, is expected to close in the third quarter of 2023.
The deal adds to a recent flurry of Israeli-founded cybersecurity startups being snapped up by global tech companies in recent months as they look to meet the fast-growing security needs of businesses but are facing a global tech funding crunch. Earlier this week, US cybersecurity company Rubrik said it is acquiring Israel-based startup Laminar, a data security platform provider that helps businesses and organizations monitor and protect sensitive data stored in public clouds.
In March, Cisco Systems, a US maker of networking software and hardware, said it intends to buy Israel’s Lightspin Technologies, a developer of cloud security software. Other deals include US tech giant IBM buying Israeli cyber startup Polar Security, a developer of an automated data security platform to track and protect sensitive data across hybrid cloud-based systems, and US-based cybersecurity firm Palo Alto Networks acquiring Cider Security.