Cybernomics Radio

Market Research #1 - Why Investors and Enterprises Should Invest in Israeli Cyber Companies

• Bruyning Media

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The extraordinary success of Israeli cybersecurity companies on the global stage represents a fascinating case study in how a small nation can dominate a critical technology sector. Despite having just 9 million citizens, Israel has become the world's second-largest hub for cybersecurity innovation, home to over 450 security startups that collectively attract roughly one-third of all global private investment in the field.

What drives this remarkable phenomenon? At the heart of Israel's cyber prowess lies its military intelligence units—particularly the famed Unit 8200—which function essentially as startup academies. These elite divisions train the country's brightest young minds in cybersecurity, cryptography, and intelligence gathering under real-world pressure. The statistics are striking: nearly 50% of Israeli founders who sold their companies for over $100 million served in these units, with alumni-led startups averaging exits of $317 million.

The recent acquisition agreement between Google and Israeli cloud security unicorn Wiz for approximately $32 billion exemplifies this success story. Founded just four years ago, Wiz rocketed to a $12 billion valuation, secured over $1.3 billion in funding, and now counts 40% of Fortune 100 companies among its customers. This isn't an isolated case—in the past six years alone, Israeli cybersecurity firms have generated over $23 billion in exit value through mergers and acquisitions.

For enterprise security leaders, the implications are clear: Israeli-developed technologies often represent the cutting edge in addressing emerging threats like cloud misconfiguration and AI-driven attacks. These companies combine elite technical talent with an aggressive problem-solving culture and global-first mindset, resulting in solutions that evolve as rapidly as the threat landscape itself. While adopting such technologies requires careful evaluation of product maturity, support capabilities, and long-term viability, the potential benefits include state-of-the-art protection and partnership with some of the most innovative minds in security.

Are you leveraging Israeli cybersecurity innovations in your security stack? Reach out on LinkedIn to continue the conversation about how these technologies might strengthen your organization's defenses against increasingly sophisticated threats.

Data powered by IT-Harvest 

Josh's LinkedIn

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Hey, this is Josh Bruning, and today, on Cybernomics, I'm going to talk about why investors should bet big on Israeli cybersecurity companies and why enterprise buyers should follow suit. Israel's cybersecurity ecosystem has proven itself as a world-leading source of innovation and value. Investors are voting with their dollars, and the results in funding, acquisitions and global market share validate that confidence. Enterprise buyers should similarly consider voting with their dollars and bringing these innovations into their organizations, but under the conditions that are unique to them. I'll lead with that caveat. Those who do, meaning those who invest in Israeli cybersecurity companies, will likely find themselves better protected, and they'll do it in partnership with vendors who are as hungry and agile as the attackers they aim to thwart. In cyber leveraging, israel's startup nation prowess can translate into a stronger security posture and business resilience. It's a win-win for investors and customers alike. It's a win-win for investors and customers alike. I recently sat down with Richard Steenan, the legendary ex-Gartner cybersecurity analyst, author of several books, including Up and to the Right, the Security Yearbook, and co-founder of IT Harvest. We discussed the implications of Israel on the cybersecurity stage and analyzed what IT Harvest was telling us. This podcast episode is a result of that conversation and will be available as a paper in the coming days. Hit me up on LinkedIn if you'd like a copy.

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Israel is home to over 450 cybersecurity startups and companies, and this is as of 2024. 358 if we're being strict with the final tally according to IT Harvest Still an astonishing number given Israel's small population. In 2024 alone, despite the war and geopolitical turmoil, israeli startups raised about $4 billion across 89 funding rounds, more than double the $1.9 billion raised in 2023. In fact, israeli cyber ventures now attract roughly one-third of all global private security investment, punching far above the country's weight on the world stage. This surge in capital is being funneled into companies tackling cutting-edge challenges like cloud security and AI-driven threats. One of the most notable success stories, of course, is Wiz, a cloud security startup founded in 2020. Wiz quickly became a unicorn and raised a $300 million round in 2023 at a $10 billion valuation. Then it raised a $1 billion round in 2024, valuing it at $12 billion. The company reported rapid growth over $350 million in revenue in 2023, with 40% of Fortune 100 companies as customers and drew top-tier investors. By March 2025, google's parent, alphabet, agreed to acquire Wiz for approximately $32 billion. Agreed to acquire Wiz for approximately $32 billion.

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Israel's cyber industry has a strong track record of high-profile exits and IPOs. Checkpoint Software, founded in Tel Aviv in 1993, was one of the earliest successes pioneering firewall technology. Today, checkpoint remains an industry giant with $2.6 billion in annual revenues and market capitalization around $24 to $25 billion. Other examples abound. Cyberark, an identity security company, is another Israeli-founded firm, now public with a $16-18 billion market cap. Orca Security, a cloud security unicorn, founded in 2019, has raised $600 million to date and reached a $1.8 billion valuation in its last round. It's widely seen as an IPO candidate in the near future and something that you might want to keep your eyes on.

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In the past six years alone, israeli cybersecurity companies have generated over $23 billion in exit value, and they've done this through M&A, as global tech giants like Google, microsoft and Palo Alto networks regularly acquire Israeli startups to boost their own security portfolios. The pipeline of notable deals is long. For instance, microsoft acquired Israeli cloud security firm Adelam for $320 million back in 2015. And more recently, rapid7 bought Insights, israeli threat intelligence startup, for $335 million. This steady drumbeat of big exits, unicorn valuations and lucrative acquisitions, culminating in the WizGoogle deal, reinforces investor confidence that Israeli startups can deliver outsized returns.

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Israel's cybersecurity ecosystem stands out even on a global stage, especially when compared to other major tech hubs. The United States is the world's largest cybersecurity market by absolute size, home to thousands of cybersecurity companies and multi-billion dollar vendors like Palo Alto Networks, crowdstrike and others. Us startups still receive the majority of global cybersecurity venture funding each year. However, israel is firmly in the number two hotspot. However, israel is firmly in the number two hotspot. In 2024, israel raised about $4 billion, which was second only to the US and represented about a third of all private cyber funding worldwide. Many of Israel's top startups have a US presence or an incorporation, hence why it's a little bit difficult to get a final tally on how many Israeli companies there really are, because then how do you measure the ones that are mostly in Israel, mostly in the United States? Anyways, you get the idea, and US investors frequently lead Israeli funding rounds. In per capita terms, israel far outstrips the US. One analysis noted Israel drew 28 times more VC funding per capita than the US. For investors, israel offers an extremely high density of cyber innovation in a small networked community, complementing the scale of the US market.

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The UK boasts a growing cybersecurity sector, but its numbers still lag Israel's. In 2024, the UK cybersecurity industry generated about £13.2 billion, and that's about $17.1 billion in revenue, and grew 12% year over year, with 2,165 cyber companies in total. However, uk startups attracted far less venture capital only 206 million pounds and that's about $268 million across 59 deals in 2024. This is an order of magnitude smaller than the $4 billion raised by Israeli firms the same year. The contrast is striking Israel had fewer companies than the UK, but drew 15 times more funding in 2024. Clearly, global investors see Israeli cyber startups as delivering more breakthrough, innovation and high growth potential than their European counterparts. Investors flock to Israel for its unique combination of talent and tech. We'll get into that a little bit later.

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Then there's China. China's cybersecurity sector is large and rapidly growing, but it is still driven mostly by domestic demand and state-led investment. China's cyber market was estimated around $14 billion in 2022 and is expected to grow over 20% annually. As the government mandates greater security spending. There are several major Chinese security companies, greater security spending. There are several major Chinese security companies 360 Security and many others which I'm sure I will be unable to pronounce, and there are plenty of other startups.

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But the ecosystem differs from Israel's in two key ways. First, chinese cyber firms primarily serve the huge internal Chinese market under tight regulatory oversight. Well, no surprise there. Global expansion is limited due to political and trust barriers. No surprise there either. Second, foreign venture investment in Chinese cyber startups is relatively low, as Beijing often prefers to groom strategic tech sectors through state funding or local capital. In recent years, venture funding in China has slowed and government funds have stepped in. By contrast, israel's cyber startups are highly global-facing, targeting US worldwide customers from day one, and are heavily funded by international VCs. Thus, while China's overall cybersecurity market is huge, israel produces more globally oriented cyber innovation. Investors from Silicon Valley may find it much easier to invest and integrate Israeli startups than Chinese startups. In short, israel is unique in combining a small domestic market with an outsized global impact, something neither the UK nor China has achieved in cyber to the same degree.

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Why exactly are investors so confident in Israeli cybersecurity startups? Several core factors in Israel's ecosystem contribute to the investor enthusiasm that we're seeing. At the heart of Israel's cyber prowess is its talent pipeline forged in military intelligence units. The IDF's Unit 8200 is often dubbed as the Ivy League of Cybersecurity. Each year, hundreds of top young recruits undergo intensive training in cyber warfare, code breaking and intelligence. Nearly 50% of Israeli cyber startup founders who sold their companies for over $100 million, served in Unit 8200. This unit and others like it, like Unit 81, effectively function as a startup academy. It produces technically superb, battle-tested engineers and leaders, many of whom go on to found startups after their service. The impact is evident in the data. Unit 8200 alumni-led startups have an average exit of $317 million. The median there is $200 million. The military experience imbues founders with not only a deep cybersecurity expertise, but also a network of peers and a problem-solving mindset under pressure. Investors recognize that Israeli founders coming out of this ecosystem have a unique pedigree and insight into cyber threats, often having worked on nation-state level security challenges from Checkpoint's founders in the 90s to today's leaders at firms like Wiz and SentinelOne, giving VCs confidence that Israeli startups are led by world-class cyber experts.

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Israel's broader startup ecosystem and VC infrastructure further catalyzes cybersecurity innovation. The country famously embraced tech entrepreneurship early, earning the moniker Startup Nation, and over the years it has developed a robust support system for new ventures. There are numerous cyber-focused venture capital funds and incubators. For example, yl Ventures, a US-Israeli VC, specializes in seed funding for Israeli startups and actively mentors them. Similarly, firms like Team8, founded by ex-IDF veterans, operate venture studios to co-create cybersecurity startups. These investors not only provide capital, but also connect founders with CISOs and global customers early on. This accelerates product market fit. The results can be seen in funding data In 2024, over 50 seed stage cyber deals took place in Israel.

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Many of Israel's founders are repeat entrepreneurs as well, having had prior exits. This creates a virtuous cycle. Successful founders often reinvest as angel investors or start new companies, and their reputations attract VC funding quickly. As an example, wiz's co-founder, asaf Rapoport, had previously sold a startup, adalom, to Microsoft, which has helped Wiz gain instant credibility. Investors are essentially betting on a playbook that has worked repeatedly A strong pipeline of ideas, sometimes spun out of military tech, backed by experienced founders and specialized VCs, and this tends to yield high growth companies. I mean, not surprisingly, foreign venture capital flows heavily into Israel. Upwards of 75% of Israeli tech VC funding comes from abroad, bringing deep pockets and a global perspective. All of these factors mean that Israeli cyber startups can raise money relatively easy at early stages and scale faster, which investors love to see.

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Beyond skills and funding, israel's startup culture and market approach gives its cyber companies an edge. Israeli entrepreneurs operate with a global-first mindset from day one, since the domestic market is tiny and any startup must expand globally to achieve scale. This often means incorporating in the US, which is why the final tally is so hard to nail down, targeting American and European customers early and building products to meet international needs, like cloud platforms, compliance standards, etc. Investors see this as a rapid go-to-market strategy. Israeli companies don't waste time only in the local sandbox. They pitch to Fortune 500 firms and a pair at RSA If you're going to RSA, hit me up on LinkedIn. Government programs even assist startups in entering global markets through grants and partnerships. The result is many Israeli startups achieve early traction, with global enterprise clients validating their solutions quickly.

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Culturally, israeli teams are known for being aggressive problem solvers and risk takers, a trait often attributed to the need for self-reliance in a small country. They tend to iterate rapidly on product development and pivot as needed, which is crucial in the fast-moving cybersecurity domain needed, which is crucial in the fast-moving cybersecurity domain. This agility and innovation speed means Israeli firms are often tackling emerging threats before others. For instance, israeli startups were among the first focusing on cloud security, posture, zero-trust networking and OT or operational technology security, giving them the first mover advantages From an investor standpoint. This culture increases the likelihood of backing a breakout company. In short, israel's startup DNA creative thinking was born out of necessity, tolerance for uncertainty and global ambition, and this produces cybersecurity ventures that can out-innovate the competitors. This combination of innovation and execution is a core reason why VCs are so bullish on Israeli cyber companies Not yet convinced.

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Another supporting factor is Israel's national prioritization of cybersecurity Starts at the top, as they say. Cyber defense is considered a strategic national interest, and this permeates both policy and academia. The government launched initiatives to train more cybersecurity professionals and encourage cooperation between military units and startups. While private investment dominates funding, the government's early catalytic role and ongoing emphasis on cyber cannot be ignored. Moreover, israel's universities and research institutes produce advanced research in cryptography and computer science, adding to the talent pool. All of this contributes to an environment where cybersecurity entrepreneurship thrives. Investors are effectively leveraging a sector that the country as a whole pushes forward, from education to defense to industry. It's worth noting that even during a crisis like the 2023 Hamas war, israel's cyber sector showed resilience. Companies maintained operations and global customer support despite many employees being called to reserve duty. This resilience under adversity further solidifies the confidence that Israeli startups can weather challenges a reassuring point for investors with a long-term view.

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With investors clearly enamored with Israeli cybersecurity firms, a logical question arises Should enterprise security buyers also follow suit by adopting Israeli-developed technologies? In other words, if VCs are betting big on these companies, do they offer compelling value for enterprise customers looking to bolster their defenses? In my view, the answer is generally yes. Enterprise buyers can often reap significant benefits by leveraging Israel's cybersecurity innovations. Reap significant benefits by leveraging Israel's cybersecurity innovations, but there's a but. They should also be mindful of the following few considerations.

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First, let's start with the benefits. Number one cutting-edge innovation. Israeli cyber startups are usually at the forefront of technology. They tend to address the newest threat vectors like cloud configuration risks, ai-driven attacks, zero-day malware and others, with creative approaches. Adopting solutions from these firms can give enterprises early access to advanced capabilities that legacy vendors may not offer yet. For example, wiz's platform offers agentless cloud visibility that quickly gained 40% of the Fortune 100 as customers. Those customers benefited from a novel approach to cloud security, ahead of the pack. Using Israeli tools can thus confer a security edge and proactive posture against emerging threats.

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Second benefit talent and expertise built in. As we discussed, many Israeli companies are founded by elite cyber experts. Enterprise buyers get the advantage of tools designed by the people who have tackled some of the toughest security problems. This often translates into effective products. For instance, an Israeli endpoint security startup might bring valuable insights directly into its product detection logic. In practice, companies that deploy Israeli solutions frequently praise their technical robustness and engineering quality a reflection of the talent behind them.

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Another benefit rapid improvements and agility. Israeli vendors, being startup-minded, are typically very agile in product development. Enterprise customers can expect frequent updates, quick addition features and responsiveness to feedback. If a new vulnerability or compliance need arises, israeli firms often push out a fix or a feature faster than larger software companies. This agility means your defenses can quickly evolve. Also, israeli startups usually work closely with early customers. A buyer might have direct line to the CEO or the CTO to request enhancements. Such partnerships and co-innovation can be a big value add for the customer's specific needs.

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Another benefit of working with Israeli companies is that they're well-funded and well supported. The influx of VC funding into top Israeli startups means that these companies have the resources to support enterprise clients, and they can do that globally. Many of them open offices in the US and Europe. Early on, they hire experienced support engineers and they ensure that they can serve Fortune 500 companies. Buyers often get global-class support infrastructure despite the company being startup-sized. There's less risk of shutting down unexpectedly and they can scale deployments. If investors have vetted and backed a startup with millions of dollars, enterprise buyers can have some confidence that the company will likely stick around to continue and innovate.

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Finally, there is the benefit of pricing and flexibility. As newer entrants, israeli product companies often price their solutions attractively. To penetrate the market, enterprises might find that they get a better ROI or a better deal or more flexible contract terms compared to the incumbent vendors. Startups are eager to land marquee customers and are willing to tailor their solutions or their pricing to build that relationship. This can also translate into cost savings or custom features that benefit the buyer Over time. If the startup grows or gets acquired by a large vendor, the enterprise has already locked in a strategic technology partnership early on.

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Alright, that was the good. Here's the bad. Well, not bad, but here are some risks to consider. First, product maturity and integration. A younger company's product may not be as feature complete or as polished as those from long-established vendors. Enterprises should evaluate the maturity of an Israeli startup solution. Does it integrate with your existing IT stack? Does it integrate with your existing workflows. Are there missing features or bugs with your existing workflows? Are there missing features or bugs? Early adopters may encounter more growing pains. They may encounter an immature UI, limited documentation or a need for workarounds, and they have to do this for maybe months or so until the product matures. So it's wise to test the technology in a pilot or a limited deployment and ensure that it meets your requirements for stability, scalability and compliance. That said, many Israeli startups focus intently on their niche. If their tool solves a specific problem better than anyone else, it might be worth tolerating a few rough edges.

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Vendor viability and support is another risk to consider. While top-tier Israeli startups are well-funded, some early-stage companies may still carry viability risk. There's always a small chance that a vendor could be acquired and the product direction could change or, in worse cases, the company could fold if funding dries up. The company can fold if funding dries up or, in worst cases, the company could fold if funding dries up. Enterprise buyers should perform due diligence on the vendor's financial standing. Funding raised revenue, traction, etc. Etc. And it's reassuring when a company has backing from prominent investors and customers. For example, knowing that a startup is serving major Fortune 100 clients is a positive sign of. You should also consider support. Does the company have 24-7 support and does it have presence in your region? Israeli-based support teams mean a big time zone difference for US customers, but most firms mitigate this by operating US offices or at least on-call rotations. Still ask for customer references to verify the quality and responsiveness of support.

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Consider the risk of compliance and data security concerns. Depending on the solution. You should assess any regulatory or compliance implications of using a foreign vendor. For instance, if an Israeli cloud service will process your sensitive data, you check where that data is hosted. For instance, if an Israeli cloud service will process your sensitive data, you should check where that data is hosted and that it complies with standards like GDPR, soc2, and others. Generally, israeli companies are familiar with international compliance requirements, but highly regulated industries like government and defense and finance may require extra scrutiny. Some government buyers have country of origin restrictions. However, israel is often considered as a trusted source. Nonetheless, enterprises should ensure that the vendor meets all security certifications, encryption standards and data residency needs, but generally, israeli cyber firms often adhere to the same standards as the US.

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Consider geopolitical factors the 2023 war and ongoing regional tensions highlighted that Israeli businesses can face external challenges. It's pretty impressive that Israeli companies maintain service continually during that time, but enterprises should still have a frank discussion about business continuity plans For critical security infrastructure. It's prudent to know how a vendor would handle extreme situations. Many Israeli companies have distributed teams with offices in the US, europe and APAC, and this provides resilience. But overall, the geopolitical risk to using Israeli tech is pretty low. Israel is a stable allied country, but being aware of these factors is a part of risk management.

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You should also be aware of fast innovation pace. That's right. Sometimes. Being fast is not always good. I listed this as a benefit, but it can also be a double-edged sword. A startup rapidly pushing out new features may occasionally introduce changes that require the customer to adjust. Enterprises sometimes struggle to keep up if the product is evolving very quickly or if the company pivots strategy. Ensure that the vendor's pace aligns with your ability to absorb updates. Look for ways to control the update schedule or the release notes and testing schedules. Essentially, ensure that the innovation is not outpacing your organization's capacity to implement. In most cases, agile development is positive, but it requires good communication from the vendor and the customer's team the bottom line for enterprise buyers. Here's what I think Many of the world's leading companies are leveraging Israeli cybersecurity products, often to tackle the newest challenges in cloud identity and threat detection.

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The benefits of adopting these technologies include state-of-the-art protection and partnership with some of the smartest minds in security and partnership with some of the smartest minds in security. However, due diligence is key. Evaluate the startup's stability, security, posture and roadmap and make sure that it fits your company's needs. If chosen carefully, an Israeli cyber solution could significantly enhance your security stack's effectiveness. Much like a savvy investment enhances a portfolio, and I think that it's time to take action. If you haven't done so yet, it's really worth considering and looking into Israeli firms.

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Investors are heavily backing Israeli cybersecurity companies for a good reason. Israel offers an almost unique mix of top-notch talent, a history of successful outcomes, continuous innovation and a global outlook that turns local startups into international players. The record funds flowing into Israel's cyber sector is poised to remain at the cutting edge of security technology. For investors, the Israeli cyber domain provides fertile ground for high returns. The Israeli cyber domain provides fertile ground for high returns, but also increasing competition. Valuations have soared alongside notable exits. Savvy investors will continue to build relationships with Israeli founders early, possibly even leveraging incubators or seed funds in Tel Aviv to get the next big idea before it becomes a unicorn.

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Keeping an eye on the trends emerging from Unit 8200, that's the IDF's alumni and the problems that they choose to solve can offer a preview of what's next in cybersecurity. Today's buzz may be around securing AI systems or quantum resistant encryption. These are areas that are likely to spawn Israeli startups. In short, the investment thesis remains strong. Backing Israeli cyber startups means tapping into some of the best innovation in cybersecurity globally. The key is diligence in picking the winners those with both brilliant tech and a solid go-to-market plan and staying patient for the payoff. For enterprise security leaders, the takeaway is to follow the innovation, not just the hype.

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Many Israeli cybersecurity products can directly address pain points in your organization, from cloud misconfiguration to ransomware prevention. Just as investors diversify their portfolio with Israeli startups, cisos should consider diversifying their security vendor portfolios with Israeli-led solutions when appropriate. This does not mean blindly adopting every new shiny tool, but rather keeping an open mind to the emerging vendors outside the traditional US giants. Most of the time, an Israeli company may have the best-of-breed solution in a niche that can augment your defenses. Conduct pilots speak to, reference customers and measure their impact. Conduct pilots get references and measure impact.

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Conduct pilots, get references and measure impact. The benefit often outweighs the risks, especially if you vet the company's viability and integration capabilities. By being an early enterprise customer of a high potential israeli startup, you could gain a strategic advantage and even help shape the product to your needs. Again, if you'd like a copy of this paper, please hit me up on LinkedIn. Go to linkedincom, slash Josh Bruning, or just look for Josh Bruning J-O-S-H-B-R-U-Y-N-I-N-G To learn more about Bruning Media and everything that we do. Visit bruningcom that's B-R-U-Y-N-I-N-Gcom and listen to Cybernomics every Wednesday at 7 am for insights and to keep your finger on the pulse of what's happening in the cybersecurity industry. This is Josh Bruning. Thank you.