Cyber is here to stay

If you are a member of our closed #DACH community called "Cyber-Security Investors", you received a lot of alerts in the last few days:

• Crowdstrike acquires Bionic for 350m USD;
• Cato Networks raises 248m USD based on 3 billion USD valuation;
• Legit Security raises 40m USD;
• Palo Alto Networks is on the verge of buying Talon (by Palo Alto Networks) for 600-650m USD;
• 思科 buys Splunk for 28 billion USD, in the biggest deal in the history of Cisco.

The Israeli newspapers are again full of #cyber, cyber, cyber news, just like it was in 2014, when I first wrote my thesis at the University of St.Gallen MBA , about "Swiss Venture Investments into Israeli Cyber-Security Startups: A Critical Analysis".

Since writing that thesis, as the Americans say, we "put our money where our mouth is", and invested into 22 Israeli cyber-security startups,. We are about to make our 23rd investment as we speak.

We also produced, in the last 5 years, north of 40 million USD in revenues for the Israeli cyber-security startups we have worked with, through the work of Cyverse AG .

Last week when I was in #TLV, I spoke to several venture capitalists. It has not been the easiest year for some to invest into cyber-security.

For us, 2023 was the most active year of investing, with so far 5 brand new investments, and 2 re-investments into our portfolio companies.

This year we invested into Deep Fake Security; Cloud Runtime Security; Cyber-Security & AI; Third Party Risk Management Automation; and Cloud Cost Optimization.

We re-invested into Digital Asset Infrastructure Security; and into Backup & Recovery from Ransomware.

What have we seen this year:

• Valuations are relatively decent this year at the Seed level, below 20m USD in post-money valuation.
• There are a lot of SAFEs going on, often times straight after the Seed. That's fine, as long as the SAFEs offer attractive capped valuations for investors.
• The increase in PPS (price per share) from the Seed to Round A, or from Round A to Round B, is often disappointing, many times below 2x. PPS is the most important number that entrepreneurs need to look at; not the increase in valuation of the company. If you're not sure about what I just said, drop me a line and I will explain.
• Strong companies with a real technological and go-to-market promise have no issues raising 15-20m USD rounds (3 of our companies were in this situation this year).
• If your last valuation was in 2021, and it was too high, and the company is acquired in 2023, your investors either made no money, or very little money in 2023. Luckily this was not the case for most of our companies.

After a relatively quiet year in cyber-security budget spending, the last few weeks have showed us that cyber-security is and will probably remain an exciting area of investment for many years to come.

Whether it's the integration of AI tools into enterprises, which is beginning to take place; the challenging of networks as we know them, by new and bold players; the fear of operational shutdowns caused by ransomware, both in OT but also SMB environments; the need for better observability for cyber-security professionals; and the increased need for SMB protection - - Cyber-Security will continue to be the backbone of any organization, big or small.

And a word about the political situation in Israel. We have observed the situation closely, and heard the pains of the Israeli tech people, who are close to our heart, going through weeks and weeks of demonstrations, often times with their children protesting on the streets as well.

We support the tech community, in desiring a democratic, free and innovative Israel.

We strongly believe in the power of Israel:

In the the power of our people to overcome our own shortcomings, to be creative, and to find solutions to very difficult and unforeseen situations. This has always been our strength, and we will prevail also now.

We keep supporting you, and we keep investing in you.

Yours, Shira