Former Israeli Cyber Spooks Launch Startup Incubator

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TEL AVIV—Several former Israeli signals intelligence officers on Tuesday announced that their new company has closed an $18 million funding round. Team8, which has strong ties to the Israeli military establishment, will focus on identifying cyber security technologies and startups, and help bring them to market.

Headed by Nadav Zafrir, a former head of the Israel Defense Forces’ Unit 8200 –Israel’s equivalent of the NSA or Britain’s GCHQ – the accelerator will focus on nurturing cyber-security start-ups. Some of its current companies include firms building security solutions for financial institutions as well as heavy industry. Zafrir said he hoped many of the employees who will staff the startups Team8 incubates will be veterans of Unit 8200, and other IDF technology units.

Team8 said it intends to be very much involved in the formation of the start-ups it invests in, and in the tech research the companies develop. The company did not reveal the equity stakes it intends to take.

Investors in the current funding round include Alcatel-Lucent ALU.FR +1.63%, Cisco Investments, Marker Financial Advisors LLC, Bessemer Venture Partners and Google Chairman Eric Schmidt’s Innovation Endeavors.

Team8’s founding team also includes Israel Grimberg, former head of 8200’s cyber division.

Unit 8200, the IDF’s largest single unit, has established itself over the past several decades as a major resource for Israel’s tech sector, and veterans of the unit have established hundreds of tech companies, including Check Point Software Technologies Ltd.CHKP +0.72%, Palo Alto Networks Inc.PANW +2.65%, Cyberark Software Ltd.CYBR +14.57%, and Onavo Inc., bought by Facebook Inc.FB +0.98% in 2013.

“Mandatory conscription can be an economic burden; it can also be an economic boon. The ability to select from such a comprehensive set of candidates, train them and let them work hands-on on very large scale problems, some almost unsolvable,  all at a very young age, is a true differentiator,” said Zafrir.

According to research firm IVC Research Center, Israel is currently home to about 250 companies, not including global players like IBM IBM +0.38%, Microsoft MSFT +0.44%and EMC that have cyber-security focused R&D activities in the country.