Israeli Cybersecurity Incubator Raises $18M To Fight Cybercrime

For a decade, Israeli entrepreneur Nadav Zafrir served as head of the legendary Unit 8200, the branch of the Israeli Defense Forces (IDF) responsible for collecting SIGINT (signal intelligence) and code decryption.

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After stepping down from his Unit 8200 post, Zafrir (above, far left) joined forces with Liran Grimberg (center left) and Israel Grinberg (standing) to form a new company called Team8, along with Ronni Zehavi (far right). Team 8 describes itself as “a cross between a startup, a venture capital firm and an accelerator,” and says that “it plans to build 4-6 new cybersecurity companies in the next 4-6 years.”

Thanks in large part to the top-notch security background of its founders, the company was able to land $18 million in A-round investment from a variety of well-heeled firms, including Alcatel-Lucent, Cisco Investments, Marker LLC, Bessemer Venture Partners, and Innovation Endeavors.

Silicon Valley Heavyweights Enthusiastic

Team8’s funding announcement included a ringing endorsement by Eric Schmidt, who is a founding partner of Innovation Endeavors and, of course, best known for his role as executive chairman of Google.

“Global cybersecurity threats are only becoming more targeted, frequent, and destructive in nature,” Schmidt said, “so we’re fortunate to be partnering with Team8, who is at the forefront of new cutting-edge cybersecurity innovation.”

At present, Team8’s first company is still in stealth mode, with no specific timeline for going live. The company is actively recruiting cybersecurity experts, and is looking for entrepreneurs to help develop additional businesses.

Future businesses will emerge from Team8’s “foundry,” a think tank of technology research specialists who offer both offensive and defensive expertise.

Cybersecurity Spending Rising Worldwide

Zafrir has described 2014 as a “turning point” in the awareness about the need for cybersecurity, citing the massive data breaches at Target and Sony.

“With the escalation of cyber conflicts, the world needs inter-disciplinary teams of the very best talent to formulate new approaches to security,” Zafrir said in Team8’s funding announcement. “Over the past year, Team8 has developed a unique model to tackle the toughest problems, inventing disruptive technologies that are commercialized through the creation of new startup companies.”

The timing may be good for a company well-grounded in intelligence gathering and data decryption. Governments and multi-national corporations are committing increasingly significant resources for cybersecurity. For instance, the White House recently announced the formation of the Cyber Threat Intelligence Integration Center, with a budget of $35 million, and has called for an unprecedented $14 billion in cybersecurity spending in its 2015 budget. Just three years ago, Israeli Prime Minister Benjamin Netanyahu announced an allocation of $515 million to create a cybersecurity agency, and the government has made cybersecurity one of its priorities.

As Zafrir has pointed out, “CEOs of large companies need to think like leaders of small countries,” and Team8’s military background is intended to meet those planning and security imperatives. Whether the company, even with the backing of some of Silicon Valley’s biggest players, can stand out in today’s increasingly competitive cybersecurity marketplace remains to be seen.