Two Israeli Cybersecurity Startups Raise a Combined $25 Million

Adallom got $15 million while Aorato raised $10 million.

Two Israeli cybersecurity startups started by alumni of army technology units separately announced this week they had raised a combined $25 million from investors.

Adallom, which protects databases by accumulating behavioral data generated by users, said on Monday that a group led by Index Ventures and including Sequoia Capital Israel had invested $15 million. Sources estimated that the investment valued Adallom at as much as $100 million. The company plans to used the proceeds to expand its sales force and its Tel Aviv-based development team.

On Tuesday, Aorato, whose technology watches for suspicious usage of employee credentials, such as multiple guessing attempts, said it raised $10 million from investors led by the U.S. venture capital fund Accel Partners. Other backers included Google Chairman Eric Schmidt’s Innovation Endeavors, Glilot Capital Partners and Mickey Boodaei and Rakesh Loonkar, the two cofounders of startup Trusteer, which was acquired last year by IBM for $650 million. Glilot invested $1 million in the startup in 2012.

Adallom has developed a system to monitor the use of software applications like the customer relationship management program Salesforce, Google apps and Microsoft Office 360 and protect data security. It works by directing data traffic that comes from the servers of software service providers to servers it controls with global cloud computing service providers.

Formed in 2012 by CEO Assaf Rapaport, Chief Technology Officer Ami Luttwak and Roy Reznik, vice president for research and development, the company unveiled its data security system this past November. A major coup for the startup occurred several months ago, when its system uncovered a security flaw in Office 365, which it reported to Microsoft.

“Our solution enables organizations to move to the cloud without giving up their security and compliance with regulatory standards,” Rapaport said. “It returns to organizational system managers the control over activity that they had before."

Adallom’s founders met while they were serving in the Israel Defense Forces' signal intelligence corps Unit 8200 and the Talpiot program for soldiers with outstanding information technology abilities. The startup has 20 employees, many of them Unit 8200 alumni like the company’s founders. About half a year ago the company opened a marketing and sales office in Silicon Valley, which now has five employees, including Rapaport.

In an earlier investment round, the company raised $4.5 million from Sequoia and Zohar Zisapel, the Israeli angel investor and founder of RAD Data Communications.

Aorato also unveiled its security product on Tuesday, at the same time it announced the fundraising. Founded in 2011 by CEO Idan Plotnik, his brother Ohad Plotnik and Michael Dolinsky, all alumni of IDF intelligence units, the three had previous formed the startup Foreity, a Microsoft security subcontractor that was acquired in 2012.

“The timing could not be more appropriate to launch Aorato into the cybersecurity market. [The year] 2013 showed the world the risks of advanced threats in parallel to the implications of insiders’ access to sensitive corporate data,” said Plotnik, referring to the U.S. National Security Agency analyst Edward Snowden’s release of top secret government files.

Ofer Vaknin