US investment fund Insight Partners is in advanced talks to buy Tel Aviv-based cybersecurity company Armis. Last April, Armis raised $65 million at a valuation in the hundreds of millions of dollars. A sale now is likely to be at a price closer to $1 billion, if not more.
Private equity funds tend to invest in relatively mature companies from a financial perspective. This is in contrast to tech companies which buy companies in order to improve their products or reach new markets. If the acquisition goes ahead, then management will remain in place to help Insight enhance its investment. Thus the deal will include incentives for senior management to remain in place.
Armis, which specializes in security for IoT (the Internet of Things), was founded in 2015 by Yevgeny Dibrov, Nadir Izrael, and Tomer Schwartz (who is no longer with the company). Dibrov was the first employee to join cloud computing security company Adallom, which was eventually sold to Microsoft. Izrael led the technical team on Google's automatic completions engine Google Suggest. Among the investors in Armis are Bain Capital Ventures, Cerca Partners, Sequoia, Insight Partners, Michael Boodaei, Zohar Zisapel, and Google, which recently made an investment in the company. Armis has raised a total of $115 million.
Armis's software, which is cloud-based and does not require downloading to local servers, facilitates the detection and analysis of all IoT devices connected to a network, from traditional devices such as laptops and smartphones to new unmanaged devices such as smart televisions, network cameras, printers, air conditioning systems, industrial robots, medical devices, and so on.
Asked about the possibility of an exit in an interview with "Globes" last April, Armis's founders said that they were aiming for an IPO. "Within three years we have achieved a large revenue stream and major, sophisticated customers paying a great deal of money, and we have created a very large knowledge base here that competitors will find it hard to catch up with," Dibrov said at the time.
"In the end, the decision depends on the market. When the market is big and there are already companies playing in it and capable of holding IPOs, it shows that the market is attractive. Most security markets are estimated as much less than $27 billion, the current sales potential of the IoT security market. Such a big market encourages growth and an IPO, rather than other alternatives," Izrael added.
Armis was selected as one of "Globes'" ten most promising startups for 2019.
Published by Globes, Israel business news - en.globes.co.il - on January 6, 2020
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