Israeli Ex-military Elite Raises $18m to Develop Cyber Startups

Investors including Alcatel-Lucent and Cisco are betting on the experience and connections of the 8200 army intelligence unit.

Hanan Greenblatt

Nadav Zafrir, who once headed the Israel Defense Forces’ vaunted 8200 intelligence unit, is taking his cyber skills private. Team8, which will create and develop a portfolio of startups, said Tuesday it had raised $18 million from a group of blue-chip venture capital funds.

Banking on Zafrir’s experience and ability to recruit some of Israel’s best cyber talent, the investors include multinational companies Alcatel-Lucent and Cisco as well as Bessemer Venture Partners, Marker LLC and Innovation Endeavors, the latter founded by Google’s executive chairman, Eric Schmidt.

Zafrir spent 25 years at 8200, the last 10 running the unit, famous for developing the technology behind the IDF’s intelligence capabilities as well as producing alumni who have forged some of Israel’s most successful startups.

Zafrir said at a news conference he aimed to build four to six companies over the next few years, each focusing on a segment such as cloud computing or industrial firms.

“Cyber is changing the way many organizations behave, causing them to invest more and more resources in it to prevent cyber attacks that have the potential to cause major damage,” Zafrir said.

“Team8’s vision is to challenge existing paradigms both by building startup companies and by thinking and acting differently than is done in cyber today.”

Bessemer partner David Cowan said this approach could set Team8 apart from the legions of security startups in Silicon Valley.

“When you are being targeted by human-driven campaigns you need a much deeper skill set in cyber operations that you won’t find in Silicon Valley and is nearly impossible to find outside of criminal organizations and governments,” he told Reuters.

Team8’s approach is “not going to be quick or cheap,” because there’s no silver bullet to solve the problem, he said.

Zafrir told Reuters his startups would have to stay one step ahead of hackers, whom he divided into three segments: hard-core criminals bent on making money through stolen credit cards and other financial information, state-sponsored attackers and ideologists who hack for a cause.

“If we don’t find cost-effective and efficient next generation solutions that will keep enterprises and industrial plants safe, there is a true challenge to prosperity to the global economy,” he said.

Zafrir’s cofounder in the venture is Israel Grimberg, who also served in 8200. They are being joined by Liran Grinberg, who worked as a product manager at network solutions provider Contendo and social trading firm eToro.

Asaff Mischari, who has 15 years of experience in cyber research, will act as research director. Ronni Zehavi, who founded and led Contendo, which made software to speed up web and mobile sites, will be an adviser. Zehavi led Contendo before it was sold to Akami, a U.S. cloud-computing company.