Israeli venture capital fund Cyberstarts has reported the closing of its $479.8 million Opportunity Fund for follow-on investments in cybersecurity startups.
The Opportunity Fund allows Cyberstarts, led founder Gili Raanan and general partner Lior Simon, and its investors, to continue investing in its portfolio companies to maintain or even increase their stake in them, instead of adding new investors and diluting their holdings.
Since Cyberstarts is a fund that specializes in investing at a very early stage in a startup's life, usually when it is founded, it now requires hundreds of millions of dollars more in order to benefit from exits at later stages, up to an IPO. The fund is designed to help Cyberstarts invest in the Series A and B rounds of its portfolio companies, and funds may be used in later stages as well.
In 2022, Cyberstarts raised the initial $200 million for this fund and over the summer it has succeeded in adding almost $300 million more, with most of the funds believed to have been raised over a relatively short period in August and September. From the report about the fund to the US Securities and Exchange Commission (SEC), it appears the fund is registered in the Cayman Islands with offices near Michmoret, where Raanan lives.
Cyberstarts was founded five years ago by Raanan, formerly with the Sequoia Israel venture capital fund. Investors include many of the senior figures in Israel's cybersecurity scene including Nir Zuk, Marius Nacht, Shlomo Kramer, Yevgeny Dibrov, Nadir Izrael, Mickey Boodaei, Rakesh Loonkar, Amichai Shulman, as well as Assaf Rappaport's Wiz, which has been Cyberstarts flagship investment. According to Pitchbook, over the past year Emily Heath has joined Raanan and Simon at Cyberstarts as a third partner.
Cyberstarts expecting to record more exits
The new fund will allow Cyberstarts to continue investing in its mature companies, many of them unicorns such as Wiz and FireBlocks. Market sources believe that Cyberstarts had already invested from its Opportunity Fund in Bionic.ai, which was sold last week for an estimated $350 million to CrowdStrike. Although the investment, believed to be about $12 million from the new fund, did not register a significant return, it helped Cyberstarts maintain its stake in the company. In total, Cyberstarts recorded an exit worth many tens of millions, on an investment estimated at about $20 million in the company. In March 2023, Cyberstarts profited from the $412 million sale of portfolio company Axis Security to HPE, and additional exits are expected as part of the wave of exits sweeping the Israeli cybersecurity industry.
Published by Globes, Israel business news - en.globes.co.il - on September 24, 2023.
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