Israeli cybersecurity firms raised record $8.8b in 2021, exports reached $11b

Annual figure exceeds $2.9 billion in investments for all of 2020; 1 out of 3 cybersecurity unicorns worldwide is Israeli, says cyber directorate

Ricky Ben-David is a Times of Israel editor and reporter

Illustrative: A data protection concept.(Galeanu Mihai via iStock on Getty Images)
Illustrative: A data protection concept.(Galeanu Mihai via iStock on Getty Images)

Israeli cybersecurity companies broke a number of new records in 2021, according to the Israel National Cyber Directorate, including funding, exports, and acquisition values.

Local companies raised a record $8.8 billion in over 100 deals last year and 11 of them became unicorns, or private companies valued at over $1 billion, the directorate announced Thursday.

The amount raised by cybersecurity companies in 2021, $2.9 billion, was nearly triple the amount in 2020, itself a record year. The annual 2021 figure accounts for 40% of the total funds raised by cybersecurity firms worldwide this year, the data showed.

Eleven new cybersecurity unicorns in one year also marked a new record, according to the cyber directorate, which added that one out of every three cybersecurity unicorns in the world was now an Israeli company.

According to Israeli Export Institute data, overall cybersecurity exports from Israel were estimated at $11 billion in 2021.

Last year, there were also 40 acquisition deals of Israeli companies by local and foreign firms with an estimated worth of $3.5 billion. Notable purchases include those of cybersecurity company XM Cyber, co-founded by former Mossad chief Tamir Pardo, by Germany’s Schwarz Group for about $700 million, and Israeli cybersecurity startup Guardicore by Akamai Technologies, a public US cybersecurity firm traded on the Nasdaq, for roughly $600 million.

In addition, four Israeli cybersecurity firms went public in 2021 including SentinelOne, which in June 2021 held an initial public offering of shares on the New York Stock Exchange, raising $1.2 billion at a massive $9 billion valuation. It was touted as the largest IPO by a cybersecurity firm.

SentinelOne joined 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 $5.7 billion valuation.

Cybersecurity companies that raised large rounds in 2021 were startups Wiz, which pulled in some $400 million in multiple rounds in 2021, and Orca Security, which nabbed over $550 million in separate investments last year including by Capital G, the growth fund of Google’s parent company Alphabet, Redpoint Ventures, and Singapore-based investment company Temasek.

According to a cybersecurity report earlier this month by American-Israeli venture capital firm YL Ventures, which specializes in seed-stage cybersecurity investments, at least 15 Israeli cybersecurity startups raised more than one funding round in 2021.

The YL Ventures report also found that most of the funding in 2021 went to growth-stage cyber companies, with about $6 billion of the annual total allocated for Series C rounds and above. This is compared to $1.63 billion for later rounds in 2020.

“The cybersecurity market today has limited patience, and a ‘go big or go home’ mindset has permeated as founders focus on laying the groundwork for reaching unicorn status, building multibillion-dollar companies, going public, and more,” wrote Yonit Wiseman, associate at YL Ventures. “Cybersecurity in Israel has become a polarized market that accepts only two types of startups: potential unicorns and actual unicorns.”

With funding for bigger rounds readily available, “founders are making their goals distinctly clear in investment board rooms. They require more funding for a strong head start and later on for entering the unicorn club at record speed,” said Wiseman.

Roi Yarom, director of economy and growth at the Israel National Cyber Directorate, said the local industry “wrapped up another record-shattering year in which it showed that it was not only an economic growth engine in Israel of the highest order, but also a pillar of the global cyber security innovation ecosystem.”

Shoshanna Solomon contributed to this report.

Most Popular
read more: