Israel accounts for 16 percent of global cybersecurity investment, second only to U.S.

A picture of Israeli Defense Forces headquarters. Many of Israel's cybersecurity startups were founded by people who served in the IDF. (Flickr user Ted Eytan / CC-BY-2.0)

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Israel’s cybersecurity industry raised $814.5 million in venture capital and private equity investment in 2017, a 28 percent rise over 2016 that brings the country to second only to the United States, according to research by Start-Up Nation Central.

Israeli cybersecurity companies, centered in Tel Aviv, account for 16 percent of industry investment overall as of 2017. In 2014, that number was around 5 to 10 percent.

“Once it was a disadvantage to say you are from Israel,” Prime Minister Benjamin Netanyahu said earlier this year. “Today when you talk about cyber or advanced technologies, it is an advantage. It is advantage to say ‘I am an Israeli company.’”

Israel punches well above its weight class in cybersecurity due in large part to the talent nurtured in Israel’s mandatory military service as well as support from the Israeli government. The industry is so popular within the country that its contributing to a shortage of combat troops exacerbated by Israeli military draftees opting for computers over combat.

Cellebrite, the Israeli company famous for cracking iPhones on behalf of governments, announced record revenue in 2017. The Ethiopian government uses the Israeli company Cyberbit for spying on dissidents. NSO Group, another Israeli company, has customers in governments around the world including countries like Mexico and the United Arab Emirates that use the software against dissidents and journalists.

“There used to be a thing called the Arab boycott,” Netanyahu said. “That’s dissipating, for many, many reasons: strategic and the prominence of Israel in the technological field.”

YL Ventures and JVP Cyber Labs are the two most active investors in Israeli cybersecuriy.

Some of the major investments of the last year include $150 million to Skybox Security$100 million to Cybereason, PerimeterX landing $23 million and $9 million going to the autonomous car cybersecurity firm Upstream Security.

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funding, Israel, venture capital
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