Israeli cybersecurity co ThetaRay raises over $30m

Mark Gazit  photo: PR
Mark Gazit photo: PR

Among the investors are Jerusalem Venture Partners, GE, Bank Hapoalim, OurCrowd, and SVB Investments.

Israeli artificial intelligence and big data analytics company ThetaRay has announced the completion of a fund-raising round of over $30 million. With the latest investment, the company has raised more than $60 million. The company said that the round was significantly oversubscribed. Among the investors are Jerusalem Venture Partners (JVP), GE, Bank Hapoalim, OurCrowd, and SVB Investments.

ThetaRay says that in its five years of operation it has doubled in size every year, and that it will use the capital raised to expand its presence in Europe, Asia and the US, significantly increase its workforce and scale operations to meet the growing demand for systems that fight financial crime and money laundering.

ThetaRay machine learning and artificial intelligence technology helps financial institutions identify the earliest signs of money laundering. It is based on patented algorithms developed over a decade, and can detect anomalies in real-time, radically reduce false positives, and uncover "unknown unknowns". The company recently won The Asian Banker Risk Management Award for the best technological solution to comply with regulation of financial institutions.

ThetaRay CEO Mark Gazit said, "In this era when criminal activity and money laundering are increasing and becoming more sophisticated and also regulation is on the rise, there is a greater demand for our solutions. As the amount of digital information grows, you just can’t protect it without artificial intelligence systems. ThetaRay offers the most advanced and mature solutions to detect threats before they happen. We thank the existing investors, especially JVP, for their confidence in ThetaRay, and welcome the new ones joining in this round."

"Financial crime, money laundering, fraud and advanced integrated cyber attacks on financial institutions pose a growing systemic risk that has already put banks out of business," said Yoav Tzruya, General Partner at JVP and founding investor of ThetaRay. "Existing systems fall short of addressing the agility and innovation of rogue organizations, fraudsters and hackers. ThetaRay is uniquely positioned to address this significant market pain, through its no-rules, holistic, AI-driven solution to identify such events, while significantly reducing the operating cost for banks."

"Bad news for financial hackers, ThetaRay’s new $30 million round means that the bad guys are going to have to work that much harder for much less return," said Jon Medved, CEO, OurCrowd, a leading equity crowdfunding platform. "My simple advice to you is: find another line of work."

"I come from Jerusalem. The company was founded in Jerusalem, in the JVP incubator, and the two largest investors in the company are located in Jerusalem," Gazit told "Globes". JVP managing partner Yoav Tzruya made the connection between Gazit and the two company founders, mathematicians Prof. Amir Averbuch and Prof. Raphael Ronald Kaufman. Gazit has worked in senior management positions in several companies, and as CEO of SkyVision he led the company to a sale worth over $100 million. Bringing Gazit in as CEO was the company's first step towards becoming a major player.

"We believe that because we are changing the way in which large enterprises use data, we'll get there. We are growing very rapidly, we more than tripled the size of the company in the past year, and we expect similar growth in the future. We choose a sector, focus on it, and provide a solution to enterprises in this sector that others can't give," Gazit says. "Originally we thought we would focus on the industrial sector, but we focused on the financial sector because of its need for tools that would help it to contend with financial crime. What we want is that in the future all the major companies will use our system." He says that the company has started to develop solutions for industry, aviation, autonomous vehicles, and blockchain.

"We raise money when we feel that we need it to support out growth. This time we raised more than we planned; we wanted to raise $18 million. But the urgent need for our product meant that the world's major banks started to buy it. JVP and OurCrowd both decided to increase their investments," says Gazit. "The fund-raising round will mainly be used for global expansion, and to support the very rapid growth that we are experiencing. We will recruit dozens of employees, but we recruit cautiously and go for quality not quantity."

The company has developed an artificial intelligence product that identifies anomalies in banking behavior. There are many products on the market that do this, but, according to Gazit, ThetaRay's product is different. "What they called artificial intelligence up to now is based on rules and models, on machine learning from existing experience. But the world is changing, and systems based solely on historical learning are no longer relevant.

"What banks do is to identify anomalies, and the number of genuine alerts they receive is one in 200 alerts, which costs them a great deal of money. Our system is based on independent learning capability. It makes connections between points without trying to understand the significance of each point. Like the human brain: we try to understand the connection between points and not the entire system. Say you're a bank, and the bank has a billion transaction, and each transaction has five parameters. Our system takes five billion points, connects between them, and start to compute the connections. Using the old methods, that takes a very long time. Our innovation combines the work of Professor Averbuch and Professor Kaufman, and it enables us to connect up the points very fast."

ThetaRay was founded in 2013. It employs 80 people, 55 of them in Israel and the rest in New York, London and Singapore.

Published by Globes [online], Israel business news - www.globes-online.com - on July 3, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Mark Gazit  photo: PR
Mark Gazit photo: PR
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