Israel Cyber Industry Seen Moving Into Critical Stage of Growth

Israel’s cyber security industry numbered nearly 430 companies at the end of 2015, with more than half generating revenue and one-in-11 posting annual sales exceeding $10 million, according to IVC Research Center Ltd., which monitors and analyzes Israel’s high-tech industry.

“We are at a critical point in the evolution of the cyber industry in Israel,” said Gadi Tirosh, managing partner in Jerusalem Venture Partners, which runs an incubator for cyber security start-ups in Beersheba. “If the last three or four years were very much about seeding and identifying technology and entrepreneurs, and creating a huge wave of new companies, our challenge and opportunity now is to move these companies from initial revenue stage to significant revenue-generation engines.”

The number of companies has grown from 310 in 2010 as governments and corporations worldwide face mounting challenges to the security of their information and operations. Israeli Prime Minister Benjamin Netanyahu has made it a priority to turn Israel into a “global cyber greenhouse,” and the government has established a national cyber bureau and invested in dozens of cyber companies.

Seventy companies raised $539 million last year compared with 29 companies that drew just $65 million in 2012, IVC said. The average financing round tripled to $6.9 million from $2.3 million three years earlier.

Israel is formulating regulations for the cyber industry that would supervise the export of technologies that could be used as weapons. While IVC said it expected the industry to continue to grow, “if certain companies are restricted from exporting Israeli cyber technologies, the number of deals may slightly drop as a result.”

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