The general partner of Sequoia Capital’s Israeli arm, Gili Raanan, is setting up a new fund to invest in early stage cybersecurity companies and has recruited industry heavyweights to back the initiative.
Among the investors in the new fund are Shlomo Kramer and Marius Nacht, two of the co-founders of Check Point Software Technologies Ltd.; Amichai Shulman, co-founder of Imperva; Mickey Boodaei and Rakesh Loonkar, two of the founders of Trusteer, acquired by IBM; Nir Zuk, the founder of Palo Alto Networks; and Assaf Rappaport, one of the founders of Adallom, acquired by Microsoft Corp. Sequoia Capital is also an investor in the fund.
“We have gathered a dream team of Israeli cyber security experts,” said Raanan in a phone interview with The Times of Israel. “Cybersecurity is one of the fields in which Israel excels and in which the nation has a concentration of talent.”
Israel gets some 20 percent of global investment in the field of cybersecurity, according to government data, and has some 351 companies operating locally, according to a database of Start-Up Nation Central. Many of the entrepreneurs in the field are graduates of the Israeli army’s intelligence and cybersecurity units.
The aim of the new fund is to leverage industry leaders’ accumulated experience to help new entrepreneurs focus their ideas, identify the product they are aiming to develop and help them employ the most appropriate team. “We want to help them do all this in the best possible manner and learn from our mistakes,” Raanan said.
“We will be the world’s first fund that is backed mostly by cybersecurity experts,” he added. The entrepreneurs who are backing the fund have built cybersecurity companies at an aggregate value of $40 billion, he said.
The fund, called Cyberstarts, is “interested specifically in investing in cybersecurity companies that are just setting out and have not yet raised any meaningful investment,” Raanan said. It seeks to take companies from inception to market-ready products.
The fund has also recruited 10 US-based chief information security officers (CISOs. The main market for cybersecurity products is the US, Raanan explained, so the CISOs will help the fund understand what “the needs are on the ground, what the biggest pain points of the cybersecurity world are in the coming five years,” he said.
Raanan said that the fund could invest in cybersecurity startups globally, but most likely the majority of investment would go to Israeli firms, as the fund is based in Israel.
Raanan will continue to manage the existing portfolio of Sequoia Israel. He has been working in the fields of cybersecurity and software for more than 20 years, and has founded and managed companies including nLayers, which was acquired by EMC, and Sanctum, which was acquired by IBM.
“Israel is a unique ecosystem for cybersecurity companies where successful first-generation entrepreneurs helped fund and establish the second generation of successful companies, which in turn are now further funding the third generation of companies,” said Amichai Shulman, the co-founder of Imperva, in a statement. “Cyberstarts is the epitome of this process and maximizes the symbiotic relationship between young and talented entrepreneurs and successful industry veterans.”