Israeli cybersecurity company Cato Networks recently completed a secondary deal worth about $100 million, sources have told "Globes." As part of the deal, hundreds of employees and existing investors cashed out a portion of their holdings in the company, allowing them to convert their shares into cash without waiting for an IPO or a company sale.
This marks another significant liquidity event for Cato in just over a year, a period during which the company has continued to expand its operations in the enterprise cybersecurity market. Unlike a standard capital equity raise, where investor funds go directly into the company’s coffers, proceeds from a secondary transaction go to the selling shareholders. For employees holding options or shares, this offers a way to realize some of the value accumulated during their tenure, even while the company remains private. For long-standing investors, the deal allows them to cash out part of their investment without necessarily parting with their entire stake.
$220 million in two such secondary deals
This secondary transaction follows a major capital raise completed by Cato in the summer of 2025. The financing round initially totaled about $359 million and subsequently expanded to $409 million, based on a company valuation of $4.8 billion. That move also included a secondary transaction valued at about $120 million, in which around 1,400 current and former employees cashed out some of their shares. At this stage, the valuation at which the new secondary deal was executed remains unknown, as does the breakdown of shares sold by employees versus existing investors.
Cato’s deal joins a recent series of secondary transactions in the Israeli tech sector, where private companies have let employees and early investors liquidate a portion of their holdings prior to an IPO or exit. Earlier this month, it was reported that the Israeli AI company Wonderful completed a $170 million secondary deal in which employees and early angel investors sold shares, alongside a $550 million capital raise at a $5 billion valuation.
These transactions reflect a shift in how private technology companies address the need to compensate employees and investors. In the past, the ability to cash out holdings was mainly tied to an IPO or the sale of the company.
Today, companies that have grown on a major scale can facilitate such liquidity events at earlier stages, as happened with Wonderful. In Cato’s case, this marks a second nine-figure exit within a relatively short period.
Annual recurring revenue of $415 million
Cato Networks, which was founded in 2015 by cybersecurity entrepreneurs Shlomo Kramer and Gur Shatz, operates in the SASE sector, which integrates networking and security services into a cloud-based platform. The company’s technology allows enterprises to securely connect employees, branch offices, data centers, and cloud applications while centrally managing networking and security infrastructure. In doing so, it offers an alternative to the traditional model, in which organizations must separately buy and maintain security and networking products from various vendors.
According to the company's latest figures, its annual recurring revenue (ARR), which measures annual revenue rate from active contracts and subscriptions, has surpassed $415 million, up 42% year-on-year. Cato currently serves over 4,800 customers worldwide and has 1,900 employees, with about half of them in Israel.
The company told "Globes," "Cato’s success rests on our employees, who rank among the industry’s top talent and it is important for us that they share in the value they create and receive recognition for their contribution to the company’s rapid growth. Without commenting on specific deals, we aim to strike a balance between our investors' interest in increasing their holdings in the company and the desire to enable employees to benefit from the success they help drive. When these interests align, we achieve the exact balance we strive for, and we will continue working to ensure this remains the case."
Published by Globes, Israel business news - en.globes.co.il - on September 30, 2026.
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