Spire Capital buys Israeli web intelligence co Cobwebs

Cobwebs founders credit: PR
Cobwebs founders credit: PR

The US private equity firm will pay $200-250 million for the Herzliya-based open-source intelligence company.

US private equity firm Spire Capital has acquired Israeli web intelligence company Cobwebs. No financial details were disclosed but sources close to the deal believe that Spire Capital, which specializes in buying security companies, is paying $200-250 million for Herzliya-based Cobwebs. This is an excellent exit for the company's three founders and 170 employees as it has hardly raised any external funds - just $12 million - thus they are still holding most of the startup's shares.

Cobwebs has developed an AI-powered Open-Source Intelligence (OSINT) platform to protect global communities and organizations from crime, threats, and cyber-attacks, by providing seamless access to publicly available data.

Cobweb's founders Udi Levy (CEO), Shay Attias (CTO) and Omri Timianker (President), all graduates of IDF intelligence units, will earn an estimated $40-50 million each from the sale. Ibex Investors from Israel and Titan Ventures will earn together an estimated $50-60 million from the sale, having only invested several million dollars in Cobweb's financing round in 2019, according to PitchBook. The two funds bought a 12% stake in that round and increased their holding over time.

Sources close to the deal told "Globes" that the founders received several offers to sell their shares for investment or raise loans over the past two years but declined, thus keeping their own stakes and enjoying the fruits of the exit now. There was good reason for their refusal. Cobwebs is a profitable company for at least the past year, as far as is known with estimated annual revenue of $30-40 million.

Meta took steps against companies involved in business intelligence

Not everything has gone smoothly for the company's founders. Just under two years ago, Meta began taking steps against companies that deal in business and open intelligence, including Cobwebs, where it claimed that its clients, security authorities in various countries such as Hong Kong and Mexico, used its technology to store information about activists including social workers, opposition politicians, and senior officials from the government.

Meta reported to the media in December 2022 that it had blocked about 200 Facebook, Instagram and WhatsApp accounts operated by Cobwebs and its customers - usually users who work in security agencies around the world. According to Meta, the company sells intelligence based in part on information taken from its social networks, as well as other networks including Twitter, Flickr, websites and the "dark web", the closed internet network that facilitates clandestine criminal activity. Meta said, "The accounts activated by Cobwebs customers were not content only with collecting information about their human targets, but also engaged in human engineering using avatars in order to establish relationships with closed communities and to trick users so as to extract personal information from them."

Meta took action against Cobwebs accounts in Bangladesh, Hong Kong, the US, New Zealand, Mexico and Poland.

"This report was false," Cobwebs CEO Udi Levy told "Globes" today. "It is not relevant to the type of our customers or our field of activity. We do not provide avatars (fake accounts that allow users to be tracked on social networks, etc.)," Levy insists, "Meta also mentioned a list of countries that are not related to us.

Meta issued the report on Cobwebs, at the same time as reports on other Israeli companies such as Black Cube, Cognyte and Blue Hawk and several months after documents from the company were leaked, indicating that Meta does not enforce immoral use of its social media platforms and that the company was aware of the dangers that its algorithm creates for the public.

Levy recalls, "It was a challenging period in which you had to prove that you had nothing to hide, but we successfully passed it and proved that we had nothing to hide. In the end, the truth wins out and we are happy today to connect with one of the high-quality funds in the US and continue to show growth."

Published by Globes, Israel business news - en.globes.co.il - on July 11, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

Cobwebs founders credit: PR
Cobwebs founders credit: PR
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