Israel cybersecurity firms raise record $3.4b, 41% of global sector investment

The half-year figure exceeds the record-breaking $2.9 billion in investments for all of 2020; seven out of Israel’s 13 cybersecurity unicorns were created in first half of 2021

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

Heads of Israeli-founded cybersecurity firm SentinelOne ring the closing bell at the New York Stock Exchange, June 30, 2021, in celebration of its initial public offering. (NYSE)
Heads of Israeli-founded cybersecurity firm SentinelOne ring the closing bell at the New York Stock Exchange, June 30, 2021, in celebration of its initial public offering. (NYSE)

In the first half of the year, Israeli cybersecurity companies raised $3.4 billion in 50 deals and seven of them became unicorns, or private companies valued at over $1 billion, the Israel National Cyber Directorate said.

The money raised in the first six months of this year exceeds the sum raised by Israeli cybersecurity startups in the whole of last year, itself a record-breaking $2.9 billion, the directorate said. The half-year figure accounts for 41% of the total funds raised by cybersecurity firms worldwide, and is three times the amount raised in the same period a year earlier, the data shows.

More than a third of worldwide cybersecurity unicorns are Israelis, the data showed, with some 13 in Israel out of 30-33 globally, the directorate said.

In the first half of 2021, there were 18 acquisitions of Israeli cybersecurity firms, for a total of $2.2 billion, the data showed.

The data comes as Israeli founded cybersecurity firm SentinelOne on Wednesday held an initial public offering of shares, raising $1.2 billion at a massive $9 billion valuation, touted as the largest IPO by a cybersecurity firm.

The massive investment numbers are an “indication of Israel’s continued leadership in the cybersecurity sector,” said Roi Yarom, director of economy and growth at the directorate. Even and perhaps especially during the coronavirus pandemic, when other sectors suffered from the lockdowns, the cybersecurity sector thrived, as businesses and employees moved to working from home and the world transitioned online – necessitating more security as hacking threats surged.

“We are seeing a maturing of the local industry, which is taking an even larger share of the global cybersecurity market,” Yarom said in a phone interview. The sector is a growth engine for the nation’s economy, he said, and it will increase Israel’s resilience to cybersecurity attacks of the future.

Cato Networks, Forter, Aqua Security, Cybereason, Wiz, Axonius, BigID, Snyk, Orca Security, Riskified, Claroty, Transmit Security and OwnBackup are all Israeli or Israeli-founded unicorns, the data showed. SentinelOne exited the unicorn club with its IPO on the NYSE.

There are challenges, however, for the local industry, Yarom said, first of them being the acute shortage of talent, which is a “real glass ceiling” for the sector. “We are trying to tap into new populations, and also increase the number of women.”

In addition, he said, it is important to make sure that as the companies grow, they continue to have a significant presence in Israel. “They are going and issuing shares on the Nasdaq and these are all positive processes. But we want to see how we can keep their R&D centers in Israel and how we preserve their affinity to Israel, and make sure that the economy continues to benefit from the fruits of the sector. We want the qualitative operations to be here in Israel.”

SentinelOne’s IPO signals the company’s big potential as well as the huge interest and faith of investors, he said.

SentinelOne joins six other Israeli and Israeli-founded cybersecurity firms traded in the US markets, including Check Point Software Technologies Ltd, which has a market value of some $16 billion, and CyberArk Software Ltd, with a $5.2 billion valuation.

Most Popular
read more: