Microsoft, Qualcomm invest in Israel’s Team8 cyber-effort

Israeli cybersecurity think tank and VC fund welcomes Citigroup as non-investing partner in its ‘global cyber syndicate’

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

Illustration of Team8's investors, Jan 2017 (Courtesy)
Illustration of Team8's investors, Jan 2017 (Courtesy)

Team8, a cybersecurity think tank and venture fund that strives to create companies to tackle cybersecurity threats, said Monday that Microsoft Ventures, Qualcomm Ventures and Citigroup would join its partnership of international supporters.

Founded by veterans of the IDF’s Intelligence & Technology Unit 8200, Team8 said that Microsoft Ventures and Qualcomm Ventures would join its so-called “global cyber syndicate” as strategic investors and that it has signed a strategic partnership agreement with Citigroup as well, but without a financial investment from the bank.

The Microsoft and Qualcomm investments, whose figures were undisclosed, brings the total funds raised by Team8 to date to $92 million, the company said.

The international companies in the cyber syndicate work closely with Team8 to explore, set up and validate the creation of new startups in the cyber security sector. Microsoft Ventures, Qualcomm Ventures and Citigroup will join current Team8 cyber syndicate members Cisco, AT&T, Accenture, Nokia, Temasek, Mitsui, Bessemer Venture Partners, Marker LLC, and Innovation Endeavors, owned by Google co-founder Eric Schmidt.

Israel's Team8, from right to left Nadav Zafrir, Israel Grimberg, Liran Grinberg (founders) and Assaf Mischari, head of research (Courtesy: Layton Thompson
Israel’s Team8, from right to left Nadav Zafrir, Israel Grimberg, Liran Grinberg (founders) and Assaf Mischari, head of research (Courtesy: Layton Thompson

Adding Microsoft Ventures, Qualcomm and Citigroup to its ranks “will dramatically improve our research capabilities and access to the world’s biggest enterprises across a diverse arena of markets and industries,” said Nadav Zafrir, co-founder and CEO of Team8 and a former commander of the IDF Technology & Intelligence Unit 8200.

Team8 combines research with its knowledge of both the offensive and defensive aspects of cybersecurity and uses its global partners to access customers and test out technologies and ideas in infrastructures that Israeli companies don’t normally get access to because of the size of its market.

Step-up in daring and attacks

The world is witnessing a step-up in cyber attacks and daring, Zafrir said.

“What characterizes cyber in 2016 is that we are moving from the sidelines to the core,” he said at a press conference at Team8’s offices in Tel Aviv. And if cyberattacks were previously targeting stores and firms like Target and Sony Corp., the attacks in 2016 were on critical infrastructures, such as Ukraine’s electricity shutdown, the Swift financial infrastructure attack in Bangladesh, the internet denial of service attack on the US East Coast and the elections in the US.

“What characterized 2016 is that we found ourselves with someone shutting down the electricity,” he said. “Not for long and not in a first world country. It happened in Ukraine. But someone pulled the switch… This was the first time we saw a direct attack on an critical infrastructure — there is no infrastructure that is more critical than a civilian electric network — and this happened in 2016.”

In addition, what happened in during the US election campaign was “a phishing attack and a very effective use of information of mails with WikiLeaks,” he said. “Their combination at the right time, together with a step-up in daring, led to an alleged hit to the infrastructure in the elections process of the leading democracy in the world.”

Going forward, the world will witness an intensifying of attacks, as buildings, cars and energy grids become smarter, he said. “Cybersecurity will have to be designed into all of this,” he said. And companies will have to strive to strike a balance between privacy, cybersecurity and continued productivity, without being dragged down by safety considerations.

Cyberthreats are growing “exponentially,” said Yoram Yaacovi, general manager of the Microsoft Israel R&D Center at the meeting announcing the investment. If the number of unique cyberthreats just two to three years ago was around 20,000 a week, “today we see around 600,000 to 700,000 unique threats a week,” he said. Businesses today need to protect not just their physical space but also the new spaces created by the cloud.

By 2019 Microsoft also expects a shortage of some 2 million cybersecurity professionals globally, he said, and that is why partnering with Team8 is important for the company.

“Team8 is in our eyes a significant player in the cyber sector,” he said.

Team8 plans to launch two more companies by year end

The partnership with Qualcomm will deepen Team8’s work on mobile devices and the Internet of Things and the cybersecurity risks these present. The addition of Citigroup to the syndicate will provide the bank with access to research, new trends and innovation that are critical to the bank’s clients, said Itai Jaeger, the head of Citigroup’s cyber lab in Israel. It will also allow Team8 the possibility of working with a large organization such as Citigroup. Israel lacks the market size it needs to try out its technologies, he said, and “therefore it is thirsty to get some market perspective.”

Since it was set up in 2014, Team8 has launched two companies, illusive networks and Claroty. There are several more companies currently operating in stealth, the think tank said, forecasting the launch of two additional companies before the end of the year.

illusive networks specializes in deception technology used to detect targeted attacks, while Claroty’s industrial security platform secures and optimizes critical industrial infrastructure sites such as power grids, steel mills, chemical, food and beverage sites and oil refineries.

During its first commercial year of operations in 2016, Team8’s portfolio companies generated more than $22 million in sales, the company said. The group employs 180 people in Israel, US, UK and Singapore. It intends to hire 100 additional employees in 2017, some 65 percent from Israel, Zafrir said.

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