After a long hiatus in which there was no dominant trend in the Israeli market, it is now possible to say with some assurance that there is an scent of security in the air of the Israeli start-up scene. “Anyone standing behind or beside a firewall is a winner,” a wise man said this week.
The new trend is so manifest that newspaper readers are again seeing the forgotten name of Aladdin Knowledge Systems (Nasdaq: ALDN), and even Finjan Software succeeded in holding a financing round after a long dry spell. This column feels almost sorry for Voltaire, which abandoned the security world before raising masses of money in 2001. But don’t cry for Voltaire, as it will be remembered for identifying another trend – InfiniBand.
The security trend, unlike most others, derives from the real world, specifically the post-September 11th world. The trend relies on somewhat outlandish hype (after all, can you show me software that can stop a jumbo jet when there’s someone with a bad attitude in the cockpit?), but is long overdue (just remember the computer worms that attacked against every self-respecting organization in the past two years).
Regardless, whatever the organization, the current trend is to increasingly invest in “security,” whether at the mall or the Extranet. After all, anything goes in buzzword driven trends. This is an excellent approach for existing enterprises that can re-package existing products somewhat differently and put an emphasis on heretofore unimportant software.
However, it is unclear whether the trend is relevant for customer-less start-ups. They will have to invent and re-invent markets, or trip up veteran competitors – all the usual hurdles start-ups face.
Therefore, it’s rather difficult to understand the current enthusiasm for investing in security companies that will post sales only in a year or two. The hullabaloo will abate by then, as the Twin Towers trauma fades into the past. We can only hope that the investor trauma will not begin just then.
Published by Israel's Business Arena on February 19, 2002