Investors like Walmart and Microsoft back Team8’s venture studio with $85 million

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The Israeli cybersecurity venture studio Team8 has raised $85 million in new financing from a clutch of new and returning strategic investors including Walmart, Airbus, SoftBank, and Microsoft’s investment arm, M-12.

The studio’s plans to raise a larger fund were first reported by PEHub in May.

Team8 has long believed that by combining the strengths and security interests of strategic corporate partners it could develop better cybersecurity solutions (or companies) that would be attractive to its investors and clients.

Indeed, that was the thesis behind the $23 million that Team8 raised in 2016 when it was still proving out the model.

The company’s previous rounds of funding managed to bring Cisco Investments, Bessemer Venture Partners, Innovation Endeavors and Alcatel-Lucent into the fold. Now banks like Scotiabank and Barclays, ratings agencies like Moody’s, and insurers like Munich Re are coming on board to add their voices to the chorus of wants and needs that keep the crack cybersecurity experts from Team8 churning out new companies.

This model, of partnering with the corporate clients who will become the customers of the startups that Team8 creates isn’t confined to the security industry, but it’s where the idea has already created successful outcomes for all parties.

Earlier this month, Temasek (also a Team8 investor) acquired Sygnia, a company from the venture studio’s portfolio that had only emerged from stealth a year ago, for $250 million.

As we’d written at the time, Sygnia was typical of a Team8 investment. The company had only secured $4.3 million in funding and it was staffed by elite security specialists from Israel. Shachar Levy (who was the chief executive), Ariel Smoler, Arick Goomanovsky and Ami Kor, with its chairman Nadav Zafrir, the co-founder and CEO of Team8 and a former commander of Unit 8200.

Zafrir and Sachar are both full-time members of Team8 along with Israel Grimberg, Liran Grinberg, Assaf Mischari, a former technology leader in Unit 8200, and Lluís Pedragosa, former partner at Marker LLC.

The Tel Aviv-based company has invested in four companies that are currently selling their wares on the open market and has another four that are still operating in stealth mode. IN all, the group has raised $260 million to date, and employs 370 people around the world.

What is seemingly unprecedented is the level of cooperation among organizations with the Team8 organizations to identify threats and develop technologies that can respond to them.

According to a statement announcing the fund’s launch, companies investing into Team8 will be required to contribute insights from their Chief Information, Technology, Data and Security Officer to identify problems, develop solutions, and work on sales and marketing services for these new businesses.

“Rogue states, hackers, terrorists and criminals are intent on wreaking physical, financial and societal havoc and catastrophic damage on governments, corporations and individuals,” said Eric Schmidt, Founding Partner of Innovation Endeavors, a lead investor in Team8, in a statement. “As data continues to proliferate and our technical capabilities expand, cyber attacks and wars will increase in number and intensity.”

Team8 investors are required to nominate a “senior champion” from their business unit in addition to the corporate venture capital or corporate development team, to guide the partnership and provide executive mindshare for the mutual work together.

As shared owners in Team8 companies, these investors are deeply invested in ensuring only the best ideas, technologies and companies are created. Besides meeting in person and as a group throughout the development process of new companies, strategic investors bring their chief executives to Israel as well as host Team8 and its portfolio companies for workshops at their headquarters for continuous knowledge-sharing and strategy building, according to a Team8 spokesperson.

And the company will be expanding its focus beyond just cyberdefense thanks to its latest funding and its new partners.

“Going forward, we will continue to focus on the enterprise, but not necessarily just defense,” a spokesperson for the company wrote in an email. “The indirect impact of cyber on the enterprises are the missed opportunities to experiment, integrate and onboard new technologies because of security, compliance and fear of exposure. We’re currently working on zero-trust networks for multi-cloud environments, secure on-ramping of blockchain, safe collaboration on sensitive data; and rethinking how machine learning can significantly impact the business. These are designed with built in security, data science, and intelligence, to allow companies to prosper and not be inhibited by security controls.”