Israeli Intelligence Vets Snag $18M Investment For New Approach To Cybersecurity

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Today, a couple of former elite Israeli intelligence veterans launched Team8, a unique approach to attacking cybersecurity that combines think tank, venture capitalist and startup foundry into one company.

They also announced an $18M Series A investment from Alcatel-Lucent, Cisco Investments, Marker LLC, Bessemer Venture Partners (BVP) and Innovation Endeavors (whose team includes former Google CEO Eric Schmidt).

The idea for the company comes from three guys who know a thing or two about security. The CEO, Nadav Zafrir tells TechCrunch he spent the last 10 years of his long military service working for Unit 8200 of the Israeli Defense Force, which is the Israeli equivalent of the NSA, and is responsible for, among other things, code decryption. In fact, he was head of the organization for five years before retiring 18 months ago.

That’s when he decided to go into business with long-time Unit 8200 colleague Israel Grimberg. The two men bring years of military and intelligence experience to the table. To round out the company and bring some solid business experience to the mix, they brought in Liran Grinberg, a veteran of several startups.

“Cyber security is the biggest challenge of our time,” Zafrir said.

To solve that problem, the company has a multi-pronged methodology. First it starts with research. They identify a broad area like enterprise security and then they work with the best minds in security they can find (including their own) and begin to formulate what they call “a cyber-thesis.” This process identifies a clear problem, which allows them to begin exploring a range of possible solutions. The ideas they conceive will eventually become the basis of a company.

“We see ourselves as co-founders [of this new company] in order to build an idea that we think is disruptive and raises us above the noise to solve something,” he explained.

Once the idea is baked enough, they will finance a startup that includes some of the folks involved in the first part of the process. Team8 will continue to be heavily involved in launching the company, but they won’t build the company themselves. They will leave that to others, much like VCs.

It’s important to note that even though Team8 is ultimately financing this new company based on the cyber-thesis and solution, Zafrir is careful to differentiate his company from a conventional venture capitalist or even a startup incubator. He describes his company as a kind of hybrid.

“Unlike a conventional VC, we don’t bet on horses that look promising. We bet on the thesis,” he said. Another key difference he says is the involvement of the strategic partners like Alcatel Lucent and Cisco up front.

“You usually do this once [an idea] is validated, but we thought if you really want to bring novel solutions that will force [a company] to reinvent itself, you must have the ecosystem working together from the start,” he said. And for him, that meant bringing in the strategic partners at the beginning of the process.

David Cowan from Bessemer Venture Partners, who has been investing in security companies since the 1990s, says Team8’s approach is what makes it different, and it’s why he finds the company so compelling.

 “Team8 is developing solutions. Assessing the approach is the first step of that. You start with a problem,” Cowan said.

For instance if you want to protect industrial equipment from cyber attacks, Team8 would start by surveying the universe of possible defenses and decide if any of those make sense.

If not, they would sit down and create new ones or modify existing ones until they figure out a way to prevent the attacks, Cowan explained.

This is in stark contrast to old ways of simply trying to build a moat around the problem or worse, reacting after the problem has already happened. The Team8 approach is to solve specific issues by finding ways to get ahead of them before the attack happens.

Team8 is already testing its approach with a company still in stealth that’s looking to solve the sticky problem of advanced persistent threats (APTs). The thesis they created for this particular type of action was that attackers are on offense, and companies under attack are always playing defense. This approach is exacerbated by typical IT strategy to maintain a highly organized environment. “Everyone likes structure and nobody likes change. This is heaven for attackers,” Zafrir explained.

He said they figured out that if they could create a network that’s always changing, it would make it much harder for the attackers to find a way in because they couldn’t follow the same old defense to do it.

They brought in Check Point veteran Ofer Israeli to lead this new company and they are working now to create that kind of self-defending network.

Cowan sees what Team8 is doing as the cutting edge of security research, and where he believes we need to be headed to solve the most intractable network security issues.

“When it comes to targeted attacks organized by humans, you need to understand how these attacks are executed. This new generation of [security] startups requires offensive skills to create defensive services,” Cowan explained.

That’s precisely what Team8 is hoping to do.