How Israel Became A Hotbed For Great Cybersecurity Companies

At the beginning of the year, a report by IVC Research Center revealed that Israel currently has 436 active cybersecurity firms. The report also revealed that the value of Israeli cybersecurity startup exits totaled $11.3 billion between 2013 and 2019. Not only that, but over those six years, Israeli firms raised a total of $6.32 billion across 594 deals. But what makes Israel such a cybersecurity hot spot?

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At the center of a billion-dollar industry, Israel is consistently collaborating with smaller nations, creating new cybersecurity startups, exporting billions of dollars in products, opening local research and development centers while attracting a slew of interested foreign investors.

The geopolitical conflict Israel has been the focus of since 1948 has forced the country to invest its resources in developing and sustaining its military capabilities. As time has gone on, technology has become central to everything, including war, and cyber defense has naturally become an essential venture for the Israel Defense Forces.

Former members of the IDF found many of these companies. One example is Lior Div, a veteran of the Israeli military intelligence Unit 8200 who founded Cyberreason in 2012 before looking to bring his company to the US. "If you want to build a meaningful company (and) not just build a company and sell it, you need to move somewhere. Tel Aviv is not enough," Div told WBUR in 2017. The reason they go abroad is a financial necessity as the country's population is roughly just 8.5 million people.

Today companies like Biocatch, Orchestra Group, Aqua Security, Francisco Ventures, and Checkmarx have been at the forefront of the Israeli cybersecurity sector.

In March, Checkmarx announced it had been acquired by San Francisco private equity firm Hellman & Friedman for $1.15 billion. The deal is the largest acquisition of an application security company to date. TPG will hold a minority interest in the company alongside Insight Partners.

Checkmarx's software security solutions enable organizations to deliver secure software faster by making security checks intrinsic to the development phase.

"More than 40 of the Fortune 100 have turned to Checkmarx to mitigate risk, secure code, and embed security into every aspect of their software development," said Emmanuel Benzaquen, CEO of Checkmarx. "We are thrilled to partner with H&F in our journey that takes our 'software equals security' vision to the next level."

Founded in 2006, Checkmarx employs more than 700 employees and has around 1,400 customers across 70 countries. Its clients include SAP, Samsung, and Salesforce.