Israeli venture capital fund Cyberstarts, which invests in early-stage cybersecurity startups, said May 25 that it had raised $100 million for its second fund, and that Lior Simon, former investor at Sequoia and Arbor, has joined the fund as partner.
The company was founded in 2018 by entrepreneur Gili Raanan, a partner in Sequoia Israel, with a first fund of $54 million.
Cyberstarts focuses on identifying high-potential early stage entrepreneurs in the cyberspace field. The fund has developed a unique methodology in which senior chief security officers (CISOs) of giant US companies participate in the evaluation and guidance of Cyberstarts’ portfolio companies. Over 500 such meetings have taken place so far.
To date, the fund has made 6 investments. Two of the companies, Fireblocks and Axis Security, have already raised $33 million in follow-on rounds. Three of the investments were made in companies led by serial entrepreneurs, who themselves are investors in the fund. The majority of Cyberstarts’ funds come from 40 successful cybersecurity entrepreneurs.
"The confidence expressed by our investors, the world's leading cybersecurity minds, especially during this time of economic crisis, is a huge vote of confidence," Raanan said in a statement. "The hunger for innovative cybersecurity solutions, particularly in times of crisis, is growing as a result of the rapid move to work-from-home, the growing transition to cloud computing and the push for automation for lowering operating costs."
Raanan, who served for ten years in the IDF's 8200 unit, also founded startups Sanctum and nLayers.
The statement also said that Lior Simon, who established and managed Arbor Ventures Investments in Israel, a global fund that specializes in FinTech investments, and previously served as an investor in Sequoia, has joined Cyberstarts as partner in the fund.
"I am delighted to be joining forces with Gili, after years of acquaintance and joint work at Sequoia,” Simon said in a statement. "This is an exciting opportunity as Cyberstarts is well-positioned to play a leading role in building substantial businesses with the most amazing entrepreneurial teams in Israel."
Assaf Rappaport, co-founder of Adallom and Beyond, and former CEO of Microsoft Israel Research and Development, said "Cyberstarts is the Israeli cyber dream team. It is the only fund in the world established by entrepreneurs for entrepreneurs. Investor involvement in the fund goes well beyond the money invested. The help they provide us and other Cyberstarts entrepreneurs is an extremely significant and strategic asset. There is no need to present Gili and his exceptional abilities. From my point of view, our work together is that of a great partnership both on a professional and personal level."
Cyberstarts has recruited 40 senior CISOs as consultants from major US companies such as Starbucks, Home Depot, Walmart, AIG, United Airlines, Massmutual Insurance, and cloud-first companies like Docusign and Zoom. All have vast experience in procurement and implementation of cybersecurity products in significant companies. Their engagement includes supporting decision-making in the fund as well as helping portfolio companies with critical insights to product-market-fit in their respective markets.