With the rising threat of cyberattacks, the world is investing heavily in Israeli cybersecurity companies to ward off potential threats.
The Israeli cybersecurity sector kicked off 2021 with a dazzling USD 1.5 billion in funding, split across 17 deals, in the first quarter of the year. Entrepreneurs and analysts in the cyber tech sector believe this is just the beginning, noting that the global community will continue to invest, acquire, and team up with local cybersecurity startups to deal with the growing rate of cyberattacks.
“For the last decade, Israel has been a source of amazing innovation. Today, a big chunk of the global cybersecurity innovation is being developed in Israel,” Arik Kleinstein, managing partner and co-founder of Glilot Capital, told NoCamels.
Israeli companies offer a range of cybersecurity solutions for all sectors. In fact, the impressive first quarter funding comes on the heels of a record year of investments for domestic cybersecurity. In 2020, investments reached USD 2.9 billion, and total investments in cybersecurity in Israel made up 31% of investments worldwide, placing Israel second only to the United States.
Israel is a world-renowned name for its technology and security solutions. Cybersecurity requires both.
“The world has realized that Israel has significant cybersecurity potential, and that is why they come here. They come for the opportunity,” says Kleinstein. “We have a very unique ecosystem that fully captures the potential of cybersecurity, and that’s the reason why investors from all over the world come here.”
This unique cybersecurity ecosystem is made up of big cybersecurity companies, global multinational firms with Israeli R&D arms, new startups, army training, and government support for both private and public endeavors. Together, these components have created an effective community that is bringing necessary cybersecurity solutions to market.
“Although cyber threats are a global threat, the scope of Israel’s activity in the field is immeasurably more extensive than that of most countries,” Einat Meyron, an Israeli cyber resilience expert, tells NoCamels. “When examining the potential success of projects in the cybersecurity field, especially in Israel, it’s impossible to disconnect the development environment of the entrepreneurs themselves.”
The need for cybersecurity solutions jumped in the past year, in large part due to the COVID-19 pandemic moving work to home. In Israel, the pandemic pushed local companies in terms of development and also in terms of sales.
“The pandemic definitely increased what we call the attack surface. The more connections we have today, the more computers and mobile devices we have, then the attack surface increases. COVID-19 led to a situation where many employees were working from home without adequate security infrastructure. And that created more opportunities for attackers. We’ve definitely seen a significant increase in cyberattacks,” says Kleinstein.
The National Cyber Directorate (INCD) said in its annual report for 2020 that Israelis reported a 50% jump in cybersecurity attacks over the previous year. The directorate showed that of the 9,100 verified cyberattacks, about 60% were hacking into social networks, 14% phishing attempts, and 14% information theft. Other cybersecurity incidents from citizens and businesses included weaknesses in computer systems (3%), intrusion into computer systems (3%), malware such as infidelity (3%), impairment of functional continuity (2%), and bypassing identification mechanisms (1%).
“The growing threats have created additional opportunities for the Israeli cybersecurity industry, which has proven once again this year that it is a national growth engine and an essential component of national resilience. The success of the Israeli cybersecurity industry is first and foremost the achievement of its entrepreneurs, managers, and investors,” Roi Yarom, head of Industry Empowerment at the Israel National Cyber Directorate, said in a statement.
This past year saw five Israeli companies enter the prestigious “unicorn club” (private companies valued at over USD 1 billion) in the cybersecurity sector: Snyk, SentinelOne, Forter, Cato Networks, and BigID. According to the INCD, 33% of the cybersecurity unicorns in the world are Israeli.
Cloud security companies, another stronghold for local cybersecurity, are “getting a lot of traction from customers and investors,” says Kleinstein. “I believe 2021 will be another great year. The trend of more and more money being invested will continue. We have a very strong global position when it comes to cybersecurity. I’m very optimistic.”
This article first appeared in NoCamels, which covers innovations from Israel for a global audience.