Japanese investment giant Softbank has invested a further $200 million in Israeli cybersecurity company Cybereason, in the largest ever investment round in a cybersecurity company in Israel. According to a source close to the company, the round was at a valuation of over $1.5 billion. In February this year, Cybereason co-founder and CEO Lior Div said in an interview with "Globes" that he had declined several acquisition offers that valued the company at over $1 billion.
Softbank is the main investor in Cybereason, and has invested $350 million of the total of $400 million that the company has raised since it was founded in 2012, in five investment rounds. The remainder has come from US investors: Lockheed Martin, CRV, and Spark Capital, a fund that specializes in early-stage investment,
Over the last two years, Cybereason’s customer base has increased by more than 300% with over six million endpoints under protection. Cybereason has 500 employees, is headquartered in Boston and has offices in Tel Aviv, Tokyo, London and Sydney, and additional presence on all continents. “Cybereason’s big data analytics approach to mitigating cyber risk has fueled explosive expansion at the leading edge of the EDR domain, disrupting the EPP market. We are leading the wave, becoming the world’s most reliable and effective endpoint prevention and detection solution because of our technology, our people and our partners,” said Div. “We help all security teams prevent more attacks, sooner, in ways that enable understanding and taking decisive action faster.”
Cybereason is a developer of endpoint detection and response (EDR), next-generation antivirus (NGAV), and active monitoring services for enterprise cybersecurity. The company was founded by Div, CTO Yonatan Striem-Amit, and chief visionary officer Yossi Naar. It employs about 500 people, 200 of them at its Tel Aviv development center, and the rest at its offices in Boston, London, Tokyo, and Sidney. Div says that, following the current fund raising round, the company intends to expand its workforce, and that over the next 18 months the Israeli development team is expected to grow by some 100 employees.
"Globes": You previous stated that you planned to grow to 600 employees by the end of 2018, but you did not reach this target. Why?
Lior Div: "Since we don't rely on people to provide our service, we managed to reach our targets without recruiting all of these employees. The company wants to be a public company, so we eventually want to be judged according to criteria of forecasting capability and efficiency. For the place we are now at, I assume that our staff in Israel will grow by at least 50%, and by the same rate worldwide, in the next 18 months."
Cybereason's relationship with the Japanese giant has been going on for a number of years. After becoming a customer of Cybereason and distributing its solution to its customers, Softbank became one of Cybereason's investors in October 2015. Softbank invested $50 million in Cybereason in the first stage as part of a $59 million financing round that included all of Cybereason's previous investors.
As part of the investment agreement, Softbank received preferential terms as a distributor of Cybereason's products to enterprises in the Japanese market. From there, relations grew even closer: in early 2016, the two companies announced the founding of Cybereason Japan, a joint subsidiary managed by Shai Horovitz, Cybereason's former director of business development. In June 2017, Softbank invested $100 million more in Cybereason, making it the sole investor in Cybereason's fourth financing round, in addition to being the leading investor in the third round.
"We're planning an IPO for the company in the coming years, and all of our financing rounds and actions are aimed at that. Softbank, the world's largest and most aggressive investor, is not afraid of such things. They have already proved for a number of years in a row that they are continuing their support for the company, and we proved that we're continuing our growth," Div told "Globes." He takes care to stress that "We're the ones who control the company. The founders, whom I head, exercise control in holdings, the board of directors, and management." Div notes that in addition to his position as CEO, he is also chairman of the company's board of directors.
Nevertheless, this is the second round in which Softbank is your only investor. Aren't you worried about becoming dependent?
"No. When Softbank gets involved in a company that they believe can be a leading company, they make an aggressive entry and continue supporting it. The future of companies like Uber, in which they put billions, became much rosier and clearer as soon as Softbank got involved with them."
It does appear that it is Softbank's support that brought Cybereason to rapid growth. The company is reporting tens of millions of dollars in annual revenue and a threefold increase in the number of its customers to over 500 in the past two years. Cybereason's customers include Softbank itself and Lockheed Martin, both of which have invested in Cybereason; Motorola; UK airline Flybe; and RTI Surgical's medical centers. In 2018, Softbank forged a connection between Cybereason and ARM, a Softbank-owned UK chip company. That same year, ARM and Cybereason announced the development of a unique defense for ARM's Internet of Things (IoT) platform. At the time, the IoT market was a new technological direction for Cybereason. The two companies are developing a built-in defense layer in ARM's special operating system for devices connected to the Internet.
"Softbank wants us to be the world's biggest cyber company. In our case, and in the other investments that they make, whether in insurance, medicine, or smart transportation, they put money on companies they think are capable of dominating their sectors and solving the problem. This is also the way we think at Cybereason. We want and intend to solve the cyber problem at a global level," Div explains.
What do you think the cybersecurity problem is?
"Today, every concern and every company in the world is becoming more and more dependent on technology. Technology is becoming more and more connected, if you look at 5G and all of those things. Our world is becoming more and more connected, and everything communicates with everything else. Someone can look at this and protect the company as a company and protect all of it, not just its end-device, or its cloud computing infrastructure."
Many other companies and concerns in the field define the problem the same way. What is special about you?
"The problem may be defined in the same way, but the approach to the solution is very different. You can use technology created 30 years ago, or come and say, 'There's a new problem here, and we have to create new technology and a new approach, and prove that customers are adopting this technology, which solves their problem.' Today, we enter an enterprise with the ability to cover all of its computers, its cloud, and now also mobile. That is essentially the enterprise's computing power, and that's what distinguishes us. We don't look at a specific device; we protect everything. The way we handling the cyber problem is very holistic, and enables enterprises to jump several levels in their ability to grow."
Cybereason's security platform is designed to continuously supervise the various endpoints in enterprises and detect attacks of various kinds. It relies on several computer learning algorithms capable of automatically detecting attacks of various types on a variety of devices and systems. Using artificial intelligence (AI) technology, the system gathers the information obtained from all of the enterprise's computers, analyzes it, and uses it to prevent attacks. It also detects attacks that have penetrated the enterprise's existing defenses and neutralizes them in order to prevent damage.
"When we talk about AI now, people regard it as a single entity, but that's not how it is with us. We look at each of the areas in which machine learning can give a serious boost, and in each one of them, we taught the machine how to identify different types of attacks, such as viruses, malware, ransom attacks, and unnatural activity by a user with management authorization. We use AI to connect all of these parts together into a single status report. In this way, we can detect that something that happened three months ago and something else entirely that happened a month ago are a single attack that has to be stopped together," Div explains.
Cybereason's reliance on AI is probably one of the reasons that Softbank liked the company. The Japanese company recently announced that it was raising a designated fund for AI investments, in which Apple and Microsoft also invested. When Softbank and Cybereason announced the founding of a joint company, Softbank wrote in its announcement, "With the increasing sophistication of cyber-attacks in recent years… a new approach that quickly detects and deals with cyber-attacks is being called for. Cybereason's cyber-security platform, Cybereason, utilizes AI-based proprietary analytics to locate cyber-attacks… With Cybereason Japan acting as the sole agent, SoftBank will offer Cybereason in Japan."
Cybereason seeks to utilize AI to devise a system for detecting and preventing attack completely automatically. The current financing round will also support these development efforts. The company takes pride in the fact that a company using the big data analytics system it developed can already keep a single analyst to manage the protection of 150,000 computers, compared with the average in the market, which provides a solution for only 20,000 computers. "This means that the system makes decisions by itself in 95% of the cases, without a human being making any decision. For enterprises, this means that we're making the decisions for them," Div declares.
Published by Globes, Israel business news - en.globes.co.il - on August 6, 2019
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