Israeli Startup ForeScout Joins the $1 Billion Club

Cyber startup joins global group of 'unicorns' – startups with valuations of $1b or more.

The Startup Nation got its first unicorn Thursday, with the Israeli-U.S. cyber startup ForeScout saying it raised $76 million from investors at a valuation of $1 billion.

Unicorn is the term for an elite group of high-tech startups – most notably companies like the ride-hailing service Uber – with valuations in excess of $1 billion. Now valued at $1 billion, ForeScout said it had tripled its valuation over the past 18 months, while surpassing $125 million in revenue in fiscal 2015.

The lead investor is Wellington Management, a mutual fund manager based in Boston, rather than a venture capital fund, which suggests that ForeScout is eyeing an initial public offering soon.

A report by Spoke Intelligence and VB Profiles released this month estimated there are 208 unicorns around the world, half of them in the United States, although in recent months there have been signs that investors are losing their taste for such investments amid a general downturn in tech investment.

In Israel, however, tech investment has been unusually strong this year. On Wednesday, two other Israeli startups – JFrog and BlueVine – said they raised a combined $90 million. Reported fundraising over the past three weeks amounts to about $420 million.

Also Thursday, TravelersBox, which allows travelers to convert leftover foreign currency into digital currency, said it raised $10 million, led by Arbor Ventures.

ForeScout was founded in 2000 by three Israelis: Prof. Hezy Yeshurun, who is also chairman; Oded Comay (now chief technology officer); and Dror Comay, who holds the position of chief architect. The firm has a research and development office in north Tel Aviv that employs 150 people. Its CEO, however, is American Michael DeCesare, a former CEO at McAfee, and its headquarters is in Campbell, California.

ForeScout’s technology helps corporate information technology departments detect devices on their networks that they might not know about, such as a visitor to company offices plugging in his laptop to a port in a conference room or a hacker gaining access to a networked printer.

The company said additional capital will be used to expand global field operations, build a support organization and increase research and development efforts in the Internet of Things security market.

“It took 25 years for the world to get to 5 billion connected devices, but with the explosion of the IoT we’ll see around 30 billion by 2020 – an entirely new approach to security is required,” said DeCesare. “Device proliferation and IoT deployments are easy entrances for cyber criminals if not detected and protected.

TechCrunch, a technology news website, said ForeScout plans to double its research and development team this year, all told adding around 300 staff to bring the total to 900 by the end of 2016.