Israeli cybersecurity startup Armis, a maker of internet of things (IoT) security software, said it will be acquired by US-based Insight Partners, a venture capital and private equity firm, in a cash deal that values the Israeli firm at $1.1 billion. The deal marks the largest ever for a private Israeli cybersecurity firm, according to a company statement.
Armis will continue to operate independently and will be fully managed by its two co-founders, Yevgeny Dibrov, CEO, and Nadir Izrael, CTO, the firm said in the statement late Monday.
CapitalG, the growth equity investment fund of Alphabet Inc., Google’s parent company, also took part in the deal, for some $100 million, the statement said.
The deal marks the largest ever acquisition of an enterprise internet of things software firm, the statement said.
Armis, headquartered in Palo Alto, California, was founded in late 2015 to allow companies to adopt new connected devices — without fear of cyber-attacks.
The software developed by the firm automatically discovers, monitors, and provides information about all devices — from traditional laptops and smartphones to smart TVs, webcams, printers, HVAC systems, industrial control systems, and medical devices — before allowing them to connect with the network. It quarantines any suspicious and malicious devices.
Insight had participated in a $65 million funding round raised by Armis in April 2019, according to the database of Start-Up Nation Central. The startup has raised some $112 million to date from investors including Sequoia Capital, Bain Capital Ventures, and Red Dot Capital Partners.
Armis was included among the “Cool Vendors in Security for Midsize Enterprises, 2017” by the Gartner Research Group.
Closing of the deal is expected in February and is subject to approvals, the statement said.
Armis “considered growth rounds and strategic offers, but by partnering with Insight we have the best of both worlds — operational support and independence, both of which were important in our decision to take on a scaleup partner this early in our company journey,” said Dibrov, the CEO.
According to Gartner, there will be 25 billion connected devices by 2021, many of them unsecured and unprotected, creating a big opportunity for hackers. Attacks of such kind have surged 300 percent in 2019 alone. Armis said that by 2021, up to 90% of all devices will be unmanaged and unsecured — dramatically increasing potential points for attack and creating a “massive security gap” within businesses and organizations.
One of the biggest challenges keeping chief information officers (CIOs) and chief information security offices (CISOs) “up at night is how to secure the unmanaged devices proliferating through their businesses, from manufacturing floors to hospital rooms, from airports to boardrooms,” said Izrael, the CTO of Armis, in the statement. “These devices – capturing and creating business critical information, working on production lines, or administering patient care – have no protection and they need a security solution.”
“The exponential growth of Armis to date illustrates just how critical securing unmanaged devices is for businesses,” he added. The “backing of Insight” will help the firm expand its technology “to help identify devices, track their behavior and respond to the threats that target them.”
Armis said the firm grew significantly in 2018 and continued its “tremendous growth” in 2019 across all verticals including tech, healthcare, industrial, retail, smart cities/building, and transportation. Customers include Fortune 100 firms, including 25% of the Fortune 50 companies and mid-size organizations like drugmaker Allergan, food maker Mondelēz, and Oracle.
“Armis is one of the most ground-breaking enterprise data-centric security solutions that is actively protecting modern businesses today,” Jeff Horing, managing director at Insight, said in the statement. The firm has achieved “exponential growth to date,” he added, as it is solving a “huge problem.”
The deal represents “the largest Israeli Cybersecurity acquisition of a private company ever and this is an important milestone in the Armis journey, building a substantial stand-alone Cybersecurity power-house,” said Gili Raanan, chairman of Armis and general partner at Sequoia Israel and Cyberstarts.
Insight Partners invests in high-growth technology and software companies. Founded in 1995, Insight currently has over $20 billion of assets under management and has cumulatively invested in more than 300 companies worldwide.
CapitalG, formerly Google Capital, is based in San Francisco, California. Founded in 2013, it focuses on growth stage technology companies, helping them scale with support from Google’s expertise and resources.