All of the money for the new fund was raised from Israeli entrepreneurs involved in the cybersecurity sector.
Gili Raanan, a partner in Sequoia Capital Israel venture capital fund, who led the firm's investment in Adallom, sold to Microsoft for $320 million, is now launching CyberStarts, a new venture capital fund that will focus on cybersecurity startups. The fund has already raised $50 million.
"What happened," Raanan tells "Globes," "is that a group of Israeli cybersecurity entrepreneurs gathered around the fund. Almost 50 entrepreneurs invested $200,000-$5 million each. It will be the first and only fund in the world funded by entrepreneurs in the sector. As strange as it sounds, there has been no fund anywhere in the world that gets most of its financing from entrepreneurs who built successful companies and made their money in the field in which the fund operates."
"Globes": Who are the entrepreneurs who invested in the fund?
Raanan: "The well-known names who invested are Marius Nacht and Shlomo Kramer from Check Point Software Technologies Ltd. (Nasdaq: CHKP), Mickey Boodaei and Amichai Shulman from Imperva and Trusteer, Rakesh Loonkar from Trusteer and OneSecure, Nir Zuk from Palo Alto Networks, and of course the new generation of entrepreneurs who have sold companies for $100-400 million in recent years."
In how many companies are you planning to invest each year?
"I assume that I'll make something like two or three investments a year. I'm trying to spot the biggest problems in the field in the coming years and the best teams for dealing with those problems. When you take an approach like this, the date of an exit isn't an important factor.
If a business is going well and the company is growing, there's no goal here of creating an exit within a specific number of years; the idea is to make the right business decisions, and then good things will also happen on the financial side. The idea is to build successful companies in the sector and solve the biggest problems. The financial result will be a byproduct of that."
Raanan is aware that following the flood of investments and exits in recent years, the cybersecurity field is saturated with companies and investors, but he is confident that the needs of the developing market will guarantee that prosperous companies will also arise in the coming years.
He also believes that despite the fund's size and the fact that it is joining the game only now, his new fund will have a significant advantage over other players already in the market. "Israel is a power in the cybersecurity solutions sector," he says, "and the first thing I did was to go talk to the entrepreneurs - with those from Check Point and Palo Alto Networks, Imperva, and Trusteer - the biggest and most successful companies that sprang up here. I told them about what I wanted to do, and they told me, 'We want in.'"