Since September 2023, we have witnessed an extraordinary sequence of exits by Israeli cyber companies, which reached an aggregate amount of approximately 2 billion dollars.
And it’s only getting bigger and bigger in March 2023 – the Zscaler company on the purchase of the Israeli start-up Avalor for an estimated sum of 310 million dollars in cash and shares. A day before, a report was published in Bloomberg according to which the Israeli company Wiz (Wiz) is purchasing the Israeli start-up Gem Security (Gem Security) for about 350 million dollars. Two weeks ago, it was Crowdstrike that bought Fluo Security for $115 million. In fact, almost all the significant acquisitions of cyber companies in the world in the recent period were made in Israel.
In almost all major deals, the acquiring companies were large US public cyber companies. In fact, three of the five most valuable cyber companies in the world have made purchases here in recent months: Palo Alto Networks, Crowdstrike and Zyscaler. Other prominent international cyber companies, Okta and Tenable, also participated in the acquisitions.
Most of the acquired companies were very young (a few years old), and with a relatively meager revenue rate (a few million dollars and less), but the companies are acquired not because of their revenues and customers, but mainly because of the product, the technology and the team.
The buying spree is apparently not over yet. But why is this happening now?
A combination of several reasons. Some of them are related to the trends of the global cyber industry. Two years have not been easy for the industry, with many layoffs and the collapse of venture capital investments. But at the same time, it has shown resilience to the crisis, and spending by organizations on information security products has remained stable.
In 2023 and early 2024, cyber giants such as Palo Alto and Crowdstrike enjoyed a boom, revenue growth and an increase in share price (even Palo Alto’s stock crashed after the latest reports due to lowered forecasts).
In the last six months, Crowdstrike completed a 95% increase. And we haven’t even mentioned Microsoft, which is considered an extremely heavyweight cyber player – and already has a massive development center in Israel in the cyber field.
The big companies are in a hurry to expand the basket of cyber products they offer to customers, and the fastest way to do this is to purchase a start-up – and because of Israel’s dominance in the cyber industry, they find what they are looking for here.
And even though the big deals are the ones that attract attention, in recent months there have been quite a few smaller purchase deals, for millions or tens of millions of individual dollars.
