Cyber Security in Israel: Creating a Safer Digital Future
Cyber Security
In an era where digital threats grow daily, cyber security is a cornerstone of national and corporate strategy. Israel has emerged as an international cyber security industry powerhouse known for its bold and determined approach to innovation.
This article explores the unique Israeli cyber security solutions that protect digital infrastructures around the globe.
Overview of the Israeli Cyber Security Market
Israel’s cyber security landscape is marked by vigorous growth and innovation. Here are some notable highlights:
- Startups and Scale: Israel is home to over 450 cyber security startups and companies. The value of Israeli tech companies’ exits was $7.5 billion in 2023, and cyber exits accounted for 19 out of 45 transactions totaling $3.8 billion, accounting for 51% of the industry’s total transaction value.
- Market Dynamics: There has been a surge in investments in recent years, with significant funding rounds and many successful exits through acquisitions or IPOs.
- Global Standing: Israel holds a considerable share of the worldwide cyber security market and is often ranked high on global innovation indices for its cyber security capabilities.
- Workforce Development: The sector employs thousands of professionals, with projections indicating robust growth in employment and expertise.
Israel’s Cyber Security Industry is a National Security Imperative
Israel’s focus on cyber security is central to its national defense. Given the country’s geopolitical complexities and its position in a region marked by frequent conflicts, robust cyber security measures have been a priority for decades. This emphasis has led to developing sophisticated defensive cyber capabilities, which safeguard national interests and infrastructure.
From the earliest days of internet proliferation, Israeli intelligence units recognized cyber security’s potential as a critical tool. Units such as 8200, an elite part of the Israel Defense Forces, have been instrumental in developing cutting-edge technologies and methodologies. The experience and expertise gained during their service have encouraged many veterans to enter the commercial cyber security sector, where they continue to innovate.
Government Initiatives and Support
The government’s commitment to Israel cyber security reflects a strategic imperative actively implemented and supported through various national policies and initiatives. Recognizing the critical need for robust cyber security frameworks, the government has established numerous programs to strengthen digital defenses.
Key among these is the Israel National Cyber Directorate (INCD), which coordinates all national cyber defense activities. The INCD not only formulates policies and strategies but also collaborates closely with private sector companies to bolster their defenses against cyber threats.
The Israeli government also invests heavily in cyber security, consistently increasing budget allocation as the threat landscape has evolved. Investment supports various facets of the cyber security ecosystem, including research and development grants, startup acceleration programs, and public-private partnerships.
Involvement of Universities, R&D, and TTOs
Israeli universities and research institutions are pivotal in the nation’s cyber security prowess. These institutions provide education and training and contribute significantly to research and development.
Of course, regardless of how successful R&D is, this does not entail commercial applications and scalability. For this purpose, tech transfer offices (TTOs) in Israel facilitate the commercialization of innovative technologies and ensure that the knowledge developed in academic institutions can effectively contribute to solving national and global security challenges.
Here are some institutions leading in cyber security innovation:
- Tel Aviv University offers a comprehensive cyber security program through its Blavatnik Interdisciplinary Cyber Research Center. Ramot is Tel Aviv University’s TTO, facilitating the transfer of innovative technologies from academic labs to the market, with a significant emphasis on digital and cyber security technologies.
- Technion has established a reputation for deep technical expertise, hosting an annual Cyber and Information Security Research Conference that gathers academia, industry, and government experts. The university’s Hiroshi Fujiwara Cyber Security Research Center was created in 2016 in collaboration with the Japanese visionary cyber security expert. T3 is Technion’s TTO, focusing on cyber security solutions.
- Ben-Gurion University has a dedicated Cyber Security Research Center known for its cutting-edge malware detection and cryptography research. It also collaborates with Deutsche Telekom to operate the Telekom Innovation Laboratories (T-Labs), which focuses on cyber security and data protection. The technology transfer office at BGU is called BGN Technologies. It plays a critical role in translating the university’s research outputs into commercial success, with a significant focus on the cyber security sector, among other fields.
Key Israeli Cyber Security Companies 2024
- Check Point Software Technologies stands out for its advanced firewall and threat prevention solutions. These solutions are pivotal in shielding organizations from cyber dangers by leveraging threat intelligence and proactive defense strategies.
- CyberArk is dedicated to helping organizations safeguard their most critical assets by thwarting, detecting, and managing cyber threats that target privileged accounts.
- Cato Networks delivers a pioneering cloud-native and secure global SD-WAN (Software-Defined Wide Area Network) service, transforming how businesses securely connect their digital frameworks.
- Radware specializes in cyber security and application delivery solutions, ensuring businesses are shielded from DDoS assaults while maintaining the uptime and efficiency of online applications.
- Morphisec offers leading-edge threat prevention by employing moving target defense strategies. It secures endpoints against memory-based assaults and zero-day threats.
Perspectives and Opportunities: Financial Activity
Israel’s problem-solvers are bringing cyber innovation to the world’s solution-seekers.
Recent data from Finder highlights cyber security as one of the high tech industry’s most noteworthy trends for the upcoming year, second only to artificial intelligence. This anticipation mirrors the sector’s readiness to embrace artificial intelligence in cyber security measures, explore blockchain applications for enhanced security, and foster increased global collaborations.
The landscape of mergers and acquisitions (M&A) in the cyber security realm, despite experiencing a 25% drop in value from the previous year, witnessed a significant rebound in the fourth quarter, highlighting the sector’s resilience and growth potential.
This resurgence is particularly evident in the cyber security sector, where M&A exits soared to $2.8 billion in 2023, emphasizing its indispensable role within the tech ecosystem. Looking forward to 2024, investors and multinational corporations remain optimistic regarding the Israeli tech ecosystem. A notable 88% of multinationals plan to maintain or expand their presence in Israel, with positive projections for M&A and IPO activities.
In Q1 2024, the Israeli cyber security sector raised $846 million in private funding, accounting for nearly 50% of the total ecosystem funding and half of the top six exits. This was its most vigorous quarter since the second quarter of 2022.
Private Investment in Cyber Security QoQ
Leading the charge, Axonius secured $200M in a Series E round. At the same time, Silverfort captured $116M in a Series D. Additionally, Claroty and Coro each raised $100M in rounds, with the specifics of Claroty‘s round undisclosed and Coro completing a Series D.
The increased investment is partly due to more attractive valuations while market demand grows among customers and acquirers. Furthermore, M&A activity has been particularly strong, fueled by a spree of horizontal acquisitions, demonstrating the sector’s critical role and appeal in the current investment landscape.
Top Exits in 2023:
- Talon Cyber Security with a $625 exit
- Axis Security with a $500 exit
- Dig Security with a $350 exit
Top Funding Deals in 2023:
- Wiz raised a $300 million round D
- Cato Networks raised a $238 million round G
Startup Nation Central Impact
Startup Nation Central activities foster a stronger global cyber security ecosystem by delivering frictionless access to Israel’s bold and impatient innovators. Through various programs and partnerships, we help Israeli startups connect with international companies, governments, and investors to propel progress and build a more secure digital future.
Explore a wide range of Israeli cyber security startups on our Finder platform, where you can filter by funding stage, business model, location, and more.