Israeli Cybersecurity Startup Twistlock to Be Bought by Palo Alto Networks

The deal, expected to be in the hundreds of millions of dollars, will mark the American company’s fifth acquisition in Israel

Twistlock's co-founders and engineering team, November 7, 2016.

Twistlock, an Israeli cybersecurity startup, is being bought by Silicon Valley’s Palo Alto Networks, with the value of the deal thought to be in the hundreds of millions of dollars, industry sources say.

Twistlock has raised $63 million to date, from funds including Ioniq Capital, TenEleven and Dell’s investment arm.

This would be Palo Alto Networks’ fifth acquisition in Israel.

Twistlock was founded in 2015 by its chief executive, Ben Bernstein, and its vice president of research and development, Dima Stopel; the two had worked together at Microsoft’s R&D center in the information security department. The company has around 100 employees and its research and development is in Israel.

Twistlock develops cybersecurity for “virtual containers” – a work environment based on virtual containers is considered a hot field in the cloud computing world. The technology enables the efficient installation of apps, including the isolation of them from the operating system while they’re on the same server.

Virtual containers are a feature of operating systems that let every program operate as if it were in a vacuum; hundreds of programs can thus run at the same time without interfering with one another. The more the use of the technology grows, the more security products are needed that specifically suit this field. Twistlock is one of two Israeli companies developing such products; the second is Aqua Security.

“Since we released the first version of our product in 2015, it was clear that virtual containers and cloud native is the future, and that there was a significant need for security platforms that not only would protect this new technology but would also leverage it to provide better defenses than what was previously possible,” Bernstein told TheMarker in a previous interview.

In its previous fundraising round, Twistlock refused to say what valuation it was being given or what its revenues were. But it said that it was already in a phase that attracted growth funds, which generally are interested in companies with fast growth and annual revenues of at least $10 million.

It said most of its customers were among the world’s largest companies. Bernstein said that from the beginning, the company realized that it was best off marketing its product directly to programers and not to companies’ cyberchiefs, and that it was the programmers who had made Twistlock a market leader.

Palo Alto Networks bought another Israeli company, Demisto, three months ago for $560 million in cash and shares. This was the second biggest “cyber acquisition” for a private Israeli company over the past decade.