A group of veterans of Unit 8200, the Israeli military’s elite intelligence corps, has launched a “cyber security foundry” to help new companies in the expanding industry, with seed money from foreign investors including a fund backed by Eric Schmidt, Google’s executive chairman.
Team8, which described itself as a “start-up for start-ups”, announced its launch in Tel Aviv on Tuesday with $18m of investment from Cisco Investments, Market LLC, Bessemer Venture Partners and Innovation Endeavors, Mr Schmidt’s venture capital fund.
“Team8 is a new model to initiate and build cyber security companies,” said Nadav Zafrir, co-founder of the fund, who headed Unit 8200, Israel’s equivalent of the US National Security Agency and the UK’s GCHQ, for four and a half years. “We are here to solve big problems through disruptive technologies.”
The new company will be the latest to build on Israel’s experience in cyber security. Expertise was developed in response to what the country sees as a growing threat to security but it is increasingly being promoted as an economic opportunity.
Total spending on information security worldwide is forecast to grow 8.2 per cent in 2015 to $76.9bn, according to research by Gartner, and a series of high-profile cyber attacks last year, including breaches at Target, JPMorgan and Sony Pictures, pushed cyber security up the corporate agenda.
Team8 said it aimed to act as an “operational think-tank” for companies grappling with the threat from both organised crime and state-backed hackers. A team of researchers, entrepreneurs and others will be on hand to advise on new ventures.
Israel’s cyber security sector has been built largely on the back of the military, many of whose graduates move into business after their compulsory military service is over. Israeli companies have been pioneers in areas such as internet firewalls and antivirus software, developed in large part by former soldiers.
Israelis who served in Unit 8200 are particularly pervasive in high-tech because of the cutting-edge skills that they learn in the army and the informal networks with fellow soldiers they maintain after leaving.
Team8’s founders include Israel Grimberg, another veteran of Unit 8200 who has been active in Israel’s cyber industry, and Liran Grinberg, an entrepreneur who served five years in the intelligence corps.
Unit 8200 recruits its soldiers straight from Israeli secondary schools, handpicking students with superior quantitative and problem-solving skills. The unit is so secretive that serving soldiers are forbidden from discussing most aspects of their service, even with family members.
A group of dissenting military reservists from 8200 last year provided a partial – and mostly unflattering – glimpse of the unit’s activities, which they said included intrusive surveillance of Palestinians.
Mr Zafrir declined to speak about details of his service in 8200. However, he said that members of the IDF’s intelligence units had special expertise in “self-learning and working together on unknown problems”.
He added: “Intelligence is one of the biggest issues for Israel’s security survivability.
“A lot of intelligence happens in the cyber arena, but I don’t want to go more into that.”
<>Team8’s first company will focus on fighting “advanced persistent threats” – attacks targeting the core of an organisation’s network – and be headed by Ofer Israeli, formerly of Check Point, the Tel Aviv-based cyber security company. It hopes its customers will be large companies, including banks, insurers and e-retailers.
The new “cyber foundry” will face competition from established Israeli cyber security companies such as Check Point – whose headquarters is across the street from Team8’s Tel Aviv office – or, in the US, big incumbent companies and venture capital funds that work closely with entrepreneurs on cyber start-ups.
In Israel, the symbiosis between the state, the military and the private sector in the field of cyber security is perhaps closer than elsewhere.
In a speech last year, Benjamin Netanyahu, prime minister, said that Iran, Israel’s biggest regional enemy was “first and foremost” behind cyber attacks against it, and that Israel had built an “Iron Dome of cyber security” that parallels the famed missile interceptor’s ability to protect against rockets.
“We are committed to maintaining Israel’s position as a global cyber power and as such we have to implement a policy that protects cyber space as an open space and the basis for global growth,” he said.
The country is also positioning Beer Sheva, the biggest city in the southern Negev region, as a hub for new cyber companies. Several Israel Defence Forces bases have been moved to the region as part of a larger plan to promote development, and free up real estate in central Israel.
Companies and investors are working in Beer Sheva alongside the city’s Ben Gurion University on what the hub’s supporters describe as a unique ecosystem for the industry. EMC and Deutsche Telekom are among the companies that have moved to a business park there.