US cybersecurity giant CrowdStrike Holdings (Nasdaq: CRWD) is looking to make its second acquisition in the country over the past year and its third acquisition in Israel overall. A source close to the matter has told "Globes" that the US company is in talks to buy Israeli cybersecurity company Flow Security for $60-80 million.
Tel Aviv-based Flow Security was founded by CEO Jonathan Roizin and CTO Rom Ashkenazi. There was another deal in Israel recently in cloud database protection with CrowdStrike rival Palo Alto Networks (Nasdaq: PANW) buying Dig Security for $350 million.
Estimates are that CrowdStrike, which was founded as a company specializing in endpoint detection and response tools (EDR) has been looking to buy a company in the cloud data protection field that also touches on endpoints.
Flow Security is a relatively small company. According to LinkedIn it has 35 employees and has raised a total of $15 million in two seed financing rounds, the most recent of which was in August 2022. This is only a third of the amount raised by Dig Security, which was ultimately acquired for a multiple of seven of the capital invested in it, which was considered a high multiple for the industry today.
From this, it can be estimated that the parties are talking about an acquisition totaling tens of millions of dollars, probably over $60 million. If the talks come to fruition and an acquisition is completed, the founding entrepreneurs Roizin and Ashkenazi will be among the big gainers along with Ben Rabinowitz and Yafit Schwartz's Amiti Ventures, which led the first seed round, along with Amdocs Ventures, Truffle Capital, an investment fund owned by Germany's Global Pounders, Singapore's Sintel and angel investors such as former CyberArk CEO Udi Mokady, and former Demisto CEO Slavik Marcovich.
Flow Security monitors corporate data as it moves between various development environments, in cloud services and in external services connected to the organization, making sure there are no leaks and no abnormal patterns, and that data come from authentic sources and complies with regulatory rules that the organization requires. Unlike some rivals, the company also possesses advanced capabilities in identifying end users and becoming part of the user authorization management process in the organization. It can, for example, allow different users to be exposed to different data according to updated permissions. The founders of the company have also claimed in the past that Flow has the ability to understand encrypted data in its movements by accessing it before and after decryption.
The company has produced initial revenue of several million dollars in retail, healthcare and finance. In the past, Booking.com has been mentioned as a paying customer.
Competition in the field has seen players move out
Flow Security is active in one of cybersecurity's growing and most in-demand fields with companies seek protection for their cloud databases. Among the Israeli companies in the field are Cyera, Sentra, Eureka, ands larger companies including Wiz and Varonis and foreign companies including Symmetry Systems and Open Ribbon. But others like Dig Security, Polar Security and Laminar have already been acquired by bigger companies after understanding that they might struggle to compete against so many rivals.
No response was forthcoming from Flow Security cofounder Jonathan Roizin. CrowdStrike said, "We do not respond to rumors and speculation."
Published by Globes, Israel business news - en.globes.co.il - on January 15, 2024.
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