Cyberstarts Opportunity Fund: A Game Changer in Cybersecurity Investment
Understanding the Cyberstarts Opportunity Fund
Cyberstarts, a venture capital fund specializing in early-stage investments, has recently raised a staggering $479.8 million for its ‘Opportunity Fund’. The fund is designed to allow Cyberstarts and its investors to maintain or increase their stakes in its portfolio companies, rather than diluting their holdings with the addition of new investors. This is particularly significant because Cyberstarts specializes in investments at the company’s inception stage, which necessitates additional funds to benefit from later-stage exits, possibly up to the Initial Public Offering (IPO) stage.
How the Fund Boosts Cyberstarts Investment Strategy
The Opportunity Fund is a strategic move that could help Cyberstarts invest in the A and B stages of its portfolio companies, and potentially even for later-stage investments. In 2022, the firm initially raised approximately $200 million and, during the summer, successfully added another $300 million to the fund. The fund is registered in the Cayman Islands but is connected to its offices in Maccabim, located near Gili Raanan’s residence.
A Brief History of Cyberstarts
Cyberstarts was founded only five years ago by Gili Raanan, a former partner at Sequoia Israel. The venture capital firm has a group of investors, most of whom are senior members of the Israeli cyber industry. The company Wiz, a cybersecurity firm, is a flagship company of Cyberstarts, according to the PitchBook website. In 2020, Lior Simon joined the fund and was later followed by other entrepreneurs who made exits or sold their shares in cyber companies in secondary fundraising, many from the fund’s portfolio companies.
Cyberstarts’ Advisory Team
Cyberstarts is known for adding senior information security executives from American companies to its advisory team, occasionally even as managing partners. Over the years, the fund has benefited from multiple secondary rounds in its portfolio companies, which experienced a rise in value in each of the latest fundraising rounds. These companies include Wiz, Island, Fireblocks and No Name Security.
Impacts of the New Fund
The new fund could enable Cyberstarts to continue investing in its graduate companies, many of which are unicorns like Wiz and Fireblocks. The fund reportedly has already invested from its Opportunity Fund in Bionic, which was sold for approximately $350 million to CrowdStrike last week. Although the $12 million investment from the new fund did not record a significant return, it helped Cyberstarts maintain its stake in the company. Overall, Cyberstarts recorded exits of tens of millions, on an investment estimated at about $20 million over the company’s lifetime. In March this year, it sold Axis Security for about $412 million, and it is expected to record additional exits as part of the wave of exits sweeping the Israeli cyber industry.
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