Cybersecurity in Israel: Leading the World to a Safer Digital Future

In an era where digital threats grow daily, cybersecurity is a cornerstone of national and corporate strategy. Israel has emerged as an international cybersecurity industry powerhouse known for its bold and determined approach to innovation.

This article explores the unique Israeli cybersecurity solutions that protect digital infrastructures around the globe.

Overview of the Israeli Cybersecurity Market

Israel’s cybersecurity landscape is marked by vigorous growth and innovation. Here are some notable highlights:

• Startups and Scale: Israel is home to over 450 cybersecurity 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 cybersecurity market and is often ranked high on global innovation indices for its cybersecurity capabilities.

• Workforce Development: The sector employs thousands of professionals, with projections indicating robust growth in employment and expertise.

Israel’s Cybersecurity Industry is a National Security Imperative

Israel’s focus on cybersecurity is central to its national defense. Given the country’s geopolitical complexities and its position in a region marked by frequent conflicts, robust cybersecurity 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 cybersecurity’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 cybersecurity sector, where they continue to innovate.

Government Initiatives and Support

The Israeli government’s commitment to cybersecurity reflects a strategic imperative actively implemented and supported through various national policies and initiatives. Recognizing the critical need for robust cybersecurity 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 cybersecurity, consistently increasing budget allocation as the threat landscape has evolved. Investment supports various facets of the cybersecurity 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 cybersecurity 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 cybersecurity innovation:

• Tel Aviv University offers a comprehensive cybersecurity 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 cybersecurity 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 cybersecurity expert. T3 is Technion’s TTO, focusing on cybersecurity 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 cybersecurity 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 cybersecurity sector, among other fields.

Key Israeli Cybersecurity 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 cybersecurity 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 cybersecurity 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 cybersecurity measures, explore blockchain applications for enhanced security, and foster increased global collaborations.

The landscape of mergers and acquisitions (M&A) in the cybersecurity 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 cybersecurity 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 cybersecurity 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 Cybersecurity 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 cybersecurity 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 cybersecurity startups on our Finder platform, where you can filter by funding stage, business model, location, and more.