Israeli venture capital fund Cyberstarts announced today that between 2018 and 2020, the company made new investments through its first fund totaling $54 million that are today worth more than $1 billion. This represents a 300% annual net internal rate of return for its investors, which makes the fund founded by Gili Raanan and Lior Simon one of the world's top venture capital performers in terms of returns.
Cyberstarts focuses on 'first check' investments in Israeli cybersecurity companies, which have been a buzz tech sector over the past two years. Other Israeli venture capital funds focusing on cybersecurity have also fared well. For example, YL Ventures made 110% net annual returns, as of December 2021.
It is important to stress that the value of Cyberstarts' investments is still mainly on paper, although it has already realized half of its holding in Wiz, which was founded in 2020 and already had a valuation of $6 billion at its last financing round. In addition, Cyberstarts sold its holdings in Trustdome, which was sold last year for $40 million.
Other promising companies in its portfolio include: cryptocurrency security company Fireblocks, which had a valuation of $8 billion in its financing round last month; API security company NoName Security, which raised its last financing round at a $1 billion valuation; and browser cybersecurity company Island, which is close to being a unicorn. Cyberstarts portfolio also has earlier stage companies including Dazz, Bionic and Axis. Cyberstarts is currently investing from its second $100 million fund.
Cyberstarts' investors are 40 entrepreneurs in the field of cybersecurity, who are wealthy even without the returns from the fund. These investors include Check Point cofounders Shlomo Kramer and Marius Nacht, Palo Alto Networks founder Nir Zuk, Waze founder Assaf Rappaport, and Armis cofounders Yevgeny Dibrov and Nadir Izrael.
Raanan said, "The truth is that we don't know how the market will develop but we are delighted that our portfolio companies raised about $2 billion."
He added, "We are not planning exits but want to build the best and most successful businesses possible I assume that some of the companies will hold stock market IPOs and some will merge."
Asked if she expected that the companies would reach such high numbers when she invested in them Lior Simon said, "I think that at the time of the investment you don't really know what will happen. We do the best we can to reduce the risk regarding everything that depends on us. We seek the best entrepreneurs and work closely with them and here about their pains. That's the main recipe for success."
Published by Globes, Israel business news - en.globes.co.il - on February 9, 2022.
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