Microsoft, Qualcomm, Citi Join Israeli Cyber Syndicate

  • Additional partners ‘dramatically improve research’: Team8
  • Team8 companies generated more than $22M in sales last year

Team8, founded by veterans of an elite Israeli intelligence unit to solve what they consider the world’s most pressing cybersecurity problems, welcomed Citigroup Inc. and the venture arms of Microsoft Corp. and Qualcomm Inc. into its syndicate.

The group of military veterans, who have raised more than $92 million, plan to launch two companies this year. Existing portfolio companies Illusive Networks Ltd., which entices hackers to trigger an alarm by planting false data, and Claroty, whose platform secures critical industrial infrastructure, generated $22 million in sales last year.

Nadav Zafrir

Photographer: Jim Hollander/EPA

Security breaches are growing increasingly sophisticated. At the end of 2015 hackers took out power in the Ukraine. In February 2016 more than $80 million was stolen from Bangladesh’s account at the Federal Reserve Bank of New York. U.S. intelligence services recently said Russia was behind hacking during the 2016 U.S. election campaign, which disproportionately affected the Democratic Party.

“We aren’t talking about more of the same,” Nadav Zafrir, co-founder and chief executive officer of Team8, who commanded the Israel Defense Force’s 8200 unit, said of the intensifying cyber threats. “Adding the powerful brands of Microsoft Ventures, Qualcomm and Citigroup will dramatically improve our research capabilities and access to the world’s biggest enterprises.”

Egos Aside

Team8 starts with a research team that pinpoints and seeks to solve a major cyber vulnerability, then spins off the technology into a company that gets initial financing from the group. It created the syndicate as a way for the corporate world to share information and get ahead of the attackers. 

“We need to put our egos aside,” Zafrir said. “The level of collaboration in the world of cyber attackers would blow your mind.”

Qualcomm, Microsoft and Citigroup join the group’s existing syndicate partners, who include Cisco Systems Inc. AT&T Inc., Accenture Plc, Nokia OYJ, Temasek Holdings and Sumitomo Mitsui Financial Group Inc. Team8 employs 180 people in Israel, the U.S., the U.K. and Singapore and plans to hire another 100 staffers this year. Microsoft and Qualcomm made undisclosed investments in the group, Zafrir said.

Burgeoning Threats

Yoram Yaacovi, chief executive officer of research and development at Microsoft Israel, said cooperation is important in a world where the number of unique cyber threats has grown to some 700,000 each week from 20,000 just two years ago. Nagraj Kashyap, Microsoft Ventures’s corporate vice president, said in the group’s press release that the company will work closely with Team8 to research cybersecurity challenges.

With mobile networks increasingly used for managing finances, paying bills and shopping online, Qualcomm plans to work with Team8 to find ways to mitigate risk, said Quinn Li, vice president and global head of the company’s venture arm. Itai Jaeger, head of Citigroup’s security innovation center in Israel, said he planned to work with Team8 to design and develop solutions for enterprises, close product gaps and brainstorm on emerging threats.

Zafrir said that in the coming year the team plans to take on the challenge of embedding cybersecurity in the initial design of autonomous cars and smart buildings, so that it becomes “part of the tapestry.”

(A previous version of this story was corrected to show the proper spelling of a Microsoft Ventures official’s name.)

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