Israeli Cybersecurity Firm Says No Saudi Money in $200 Million Fundraiser

Cybereason raised $200 million from Japan’s SoftBank: 'We’re a unicorn with wings'

The founders of Cybereason: Yonatan Striem-Amit, CEO Lior Div and Yossi Naar.
RYUJI SUZUKI

Cybereason, an Israeli-U.S. cybersecurity company, said on Tuesday it had raised a giant $200 million from the Japanese investor SoftBank but denied that any of the capital came from Saudi Arabia.

Although CEO and cofounder Lior Div declined to elaborate, he confirmed that the company was now valued at more than $1 billion, putting it into the elite ranks of startup unicorns. “Without getting into the details, we’re already more than a unicorn – we’re a unicorn with wings,” he told TheMarker an in interview.

The entire $200 million came from SoftBank, a veteran high-tech investor that raised a massive $100 billion three years ago for its Vision Fund. Vision’s investors include Saudi Arabia’s Public Investment Fund, which has committed $45 billion.

SoftBank has invested in other companies with an Israeli connection, including $300 million in the insurance startup Lemonade and hundreds of millions in the real estate platform Compass.

Asked about whether the Saudis had now invested in an Israeli cybersecurity company, too, Div answered: “I prefer not to get into particulars about which of Softbank’s pockets the money came from, but I can say there is no Saudi money in Cybereason.”

He stressed that Cybereason’s founders, which include himself as well as Yossi Naar and Yonatan Striem-Amit, remain the biggest shareholders and continue to control the company.

Cybereason, whose headquarters are in Boston and conducts its research and development in Tel Aviv, has emerged as a major player in a key but crowded end point segment of the cybersecurity market. Competing against industry veterans like Symantech and McAfee, as well as startups like Israel’s SentinelOne, Cybereason provides security solutions for servers, laptops, smart phones, tablets and printers.

The company made headlines in June after it uncovered a massive campaign involving the theft of call records from cellular network providers. Cybereason found that the hackers had broken in to more than 10 networks around the world over seven years to obtain data such as the times and dates of calls, and their cell-based locations.

Div said what gave Cybereason an edge over competition in the end point segment was its ability to gather data on attacks from each end point in real time.

“With the information, we undertake big data analysis and represent relationships between each end point on the network and understand whether the organization is under attack or not. We‘re able to say, ‘We’ve seen an attack that starts at this station, moves on to this server in the cloud and so on,” Div explained.

Cybereason has increased the number of customers by more than 300% over the last two years to about 500, most of them Fortune 500 companies. Most prefer not to be identified by name, but they include Motorola, Lockheed Martin and even SoftBank.

Since these are big companies, Div noted, each customer represents 50,000-100,000 employees.

The new funds, which more than double the $188 million Cybereason had raised until now, will be used to boost growth and enhance its cloud-based endpoint protection platform. That includes possible acquisitions and strategic partnerships. The company’s 200-strong R&D team in Tel Aviv will be hiring extra staff.

“Our target is to build a big company and to take it public. That’s much more significant that to do an exit of a few hundred million dollars. We believe that we’re two years away from an initial public offering, but it depends also on the public market and the question of whether it will be positive,” Div said.

Startup unicorns used to be an unusual phenomenon, hence the term was coined back in 2013. But with so much venture capital available, SoftBank’s among it, more and more companies have won the designation. In Israel, they include the startups JFrog, Gett and Trax.

Last week alone, Monday.com and Lightricks raised, respectively, $150 million at a $1.9 billion and $135 million at a $1 billion valuation.