Israeli Team8 attracts investment for cyber security firms

* Raises $18 mln in initial funding round

* Alcatel-Lucent, Cisco join as strategic partners

* Firm led by veterans of Israeli military intelligence unit

* Aims to build up to build up to 6 cyber security companies

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TEL AVIV, Feb 10 (Reuters) – Team8, an Israeli venture capital fund focused on the cyber-security industry, said on Tuesday it had raised $18 million in its first round of funding, including investment from Alcatel-Lucent and Cisco .

Also participating in the round were Bessemer Venture Partners, Marker LLC and Innovation Endeavors, which was founded by Google executive chairman Eric Schmidt.

Led by veterans of the Israeli army’s 8200 intelligence and electronic espionage unit, Team8 aims to develop cyber-security companies that offer more in-depth protection than the usual defence against hacking attempts by generic malware.

Bessemer partner David Cowan said that could set them apart from the legions of security start-ups in Silicon Valley.

“When you are being targeted by human-driven campaigns you need a much deeper skill set in cyber operations that you won’t find in Silicon Valley and is nearly impossible to find outside of criminal organisations and governments,” he told Reuters.

Team8’s approach is “not going to be quick or cheap” since there is no silver bullet to solve the problem, he said.

Team8 co-founder Nadav Zafrir, who spent 25 years at 8200 and 10 years running the unit, said he aims to build four to six companies in the next few years — each focusing on a specific domain such as cloud computing, industrial firms and enterprises.

He described 2014 as a turning point for cyber security in the wake of attacks on retailer Target — in which up to 70 million customers had their personal information compromised – and Sony, and that a new approach was critical.

To that end, Israel’s government has made cyber security a priority, in the hope of building on the country’s military-grade technology and innovation.

Prime Minister Benjamin Netanyahu allocated 2 billion shekels ($515 million) in 2012 to set up a cyber security agency within his office and there are a range of venture funds based in southern Israel, where the army is moving its headquarters.

Zafrir told Reuters the firms to be created would have to stay one step ahead of hackers, whom he divided into three segments: hard-core cyber criminals whose motivation was to make money through stolen credit cards and other financial information, state-sponsored attackers, and ideologists who hack for a cause.

“If we don’t find cost-effective and efficient next generation solutions that will keep enterprises and industrial plants safe, there is a true challenge to prosperity to the globaleconomy,” he said.