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Softbank backs $400m investment in Israeli industrial cybersecurity firm Claroty

Japanese investment giant’s Israel operations are led by former Mossad head Yossi Cohen, who is joining Claroty’s board

Ricky Ben-David is The Times of Israel’s Startups and Business editor and reporter.

Claroty's leadership team from left to right: Udi Bar Sela, CFO, Benny Porat, co-founder and CTO, Amir Preminger, VP research, Guilad Regev, SVP customer care, Natalie Katester Boimer, global VP HR, Yaniv Vardi, CEO, Seth Gerson, VP and general counsel. (Courtesy)
Claroty's leadership team from left to right: Udi Bar Sela, CFO, Benny Porat, co-founder and CTO, Amir Preminger, VP research, Guilad Regev, SVP customer care, Natalie Katester Boimer, global VP HR, Yaniv Vardi, CEO, Seth Gerson, VP and general counsel. (Courtesy)

Japanese investment giant SoftBank co-led a $400 million investment in Israeli cybersecurity firm Claroty, a maker of software to defend factories and industrial plants from cybersecurity attacks, according to a joint announcement Wednesday.

SoftBank’s Israel operations are headed by former Mossad head Yossi Cohen, who stepped down from the security agency position in June after more than five years on the job. As part of the investment, Cohen will join Claroty’s board of directors.

The new investment comes six months after Claroty raised $140 million, which the company hailed then as the “largest investment ever” within the industrial cybersecurity sector.

Claroty also announced an agreement to acquire Israeli cybersecurity startup Medigate, focused on securing connected medical devices within healthcare provider networks, as it moves forward with a mission “to secure all cyber-physical systems (CPS) across industrial, healthcare, and enterprise environments – the Extended Internet of Things (XIoT).”

The company’s CEO, Yaniv Vardi said Wednesday that by “combining Claroty and Medigate’s deep domain expertise and specialized technologies into a single platform, we will take a giant leap forward on our mission to secure the ever-expanding universe of XIoT for every connected organization.

“Our vision is protecting the cyber world and cyber-physical systems in every critical infrastructure organization like oil and gas, automotive, and life sciences, and now healthcare. We want to provide one complete solution for all,” Vardi told The Times of Israel in a phone interview.

Former head of the Mossad Yossi Cohen attends the Jerusalem Post conference, held in Jerusalem, October 12, 2021. (Yonatan Sindel/Flash90)

In these sectors, “when data is at risk, people are at risk. If you look at the different manufacturing and industrial verticals, people are at risk. Hospitals are the number one vertical with the number of attacks growing – 82% of hospitals reported being under attack,” in the last 18 months or so, said Vardi, citing Medigate research. “It is a vertical that is under attack and we wanted to cover this world.”

“We envision a future where cyber and physical worlds safely connect to support our lives, and with such strong backing from some of the world’s foremost technology investors, we have the resources we need to make this vision a reality,” he added.

Benny Porat, co-founder and chief technology officer of Claroty, told The Times of Israel that the healthcare sector faces very similar cybersecurity issues to the industrial sector. “They have the same risks and the same problems, and the solution fits well.”

Porat said Claroty is a cybersecurity leader in the industrial sector, and since Medigate “are experts in their domain, it was much more efficient for our customers to offer these solutions in an organic way.”

He described the acquisition as “more like a merger — the idea is to have one unified product for these industries.”

Claroty was already working with leading companies such as Pfizer in the pharmaceutical industry and GM in the automotive field. The company had said it previously helped Pfizer secure its COVID-19 vaccine supply chain in its race to meet unprecedented global demand for the jab last year.

Porat said the Medigate acquisition will now allow Claroty to extend its solutions to Pfizer’s labs and R&D operations, in addition to the manufacturing side.

Cohen said in a statement that “as digital transformation initiatives drive the essential physical systems that we rely on for even the most basic human needs, securing these systems is ultimately about mitigating risks to human life.

“Claroty’s technology addresses a high-stakes problem in enabling safe digital transformation, and we are eager to partner with the team in its journey to protect the critical infrastructure that is the foundation of the AI revolution,” Cohen added.

The new investment brings Claroty’s total funding to date to $635 million, “making it the most well-funded cybersecurity company in the industrial, healthcare, and enterprise IoT [internet of things] sectors,” it said in the statement Wednesday.

The round also included existing Claroty investors Bessemer Venture Partners, French energy multinational Schneider Electric, ISTARI, a global cybersecurity platform set up by Singapore-based investment firm Temasek, and Israeli cybersecurity foundry Team8.

In this Nov. 9, 2020, file photo, people walk by a SoftBank shop in Tokyo. (AP/Koji Sasahara, File)

Claroty was founded in 2014 by Amir Zilberstein, the chairman, Porat, and Galina Antova, the chief business development officer.

Its commercial teams are in the US, with tech and product teams based in Israel. The company also has employees across Europe, Singapore, and Australia.

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