B2B Revenue Acceleration
B2B Revenue Acceleration

Episode · 3 years ago

28: State of Affairs: Why VCs Are Calling Israel the ‘Cybernation’ w/ Ofer Schreiber

ABOUT THIS EPISODE

It wouldn’t matter if you listened closely or not. If you’re in cybersecurity, you know about the innovation pouring from Israeli companies. We wanted to know exactly why Israel’s cybersecurity market is so strong, and what we can expect in the future.

On this episode of the B2B Revenue Acceleration podcast, we talked directly with Ofer Schreiber, a partner at YL Ventures.

YLV is a $140 million fund specifically focused on Israeli tech, and specializes in cybersecurity.

You were listening to bb revenue acceleration, a podcast dedicated helping software executive stay on the cutting edge of sales and marketing in their industry. Let's get into the show him. Welcome to be to be a review acceleration. My name is alliums and I'm yet they with Offen Shreebo from why a venture. How are you today? I'm great. Thank you for having me. That's a pleasure. So today we will be talking about the states of east, trends cyber securities market before we going to the detail. And you please tell us a little bit more about yourself, your company, why, your venture and your rule within way your venture? Yeah, absolutely so. My name is offen Shaib. I'm a partner in wild ventures. We are venture capital firm with offices in Silicon Valley and Tel Aviv, Israel, who invest in Israel startups in early stage, is set stage and mostly, mostly in Cyber Security. That has been our almost exclusive focus for the past few years. We've been working very closely with all of the folio companies, providing the value and everything they can. We build a very normous network of potensial customers and partners and fall on financing all the strategics and potential acquirers in the cyber security world in the US and we're providing access to Israel entrepreneurs in early stage to that network. Currently investing out of our third fund at the seventy five million dollar fund that we raised in twenty seventeen from doing extremely well so far. That's excellent and black to yet. So we are also, we do a fair amounts of walking the Saber Security Company, of the Sabe of security markets, I say, at the paractics, and we do see more and more trends. One more growth coming from the saber securities market, dis right. So we see a lot of Israeli player. Israel started coming into the market and actually being quite successful, and I'm sure you you follow that growth quite closely, walking in that industry and working better capital. So what an interested to...

...one er some from your perspects even and from your perspective of being so crused that market and probably speaking to the people on the day days. Is what makes this Reeli Sibo securities market so strong and walk investing in for companies such as way ventures. Yeah, so, first of all, I fully agree with what she said. Obviously we are the venture capital from the focus and Israeli investment in summer security. Share the feeling? No, from if you look at the person for all, Serber security is still a very strong market in general, globally very hot. Space security challenges are just getting more and more complex and adversaries, you know, the hacker, getting more and more sophisticated. So security is a big challenge and a big market. And Israel in general, as you may know, well calling it a start up nation. Israelis is a hard med for innovation and technology in very wrist fields, but now these days, we tend to call it cybernation, and the basis of Israel's dominance in the cybersecurity field, from my perspective, is the IDEF, Israeli Defense Force, just the sheer amount of talented people that coming out of the of the ideas and specifically the intelligence corps, from a lot of people are familiar with the unit called eight two hundred, the equivalent of the American a Y, say, and technological people that served their game real world experience to the most cutting edge and innovative cybersecurity landscape. They deal with the hottest technologies and doing really amazing stuff. This is, I would say, that this is the best training in the world to become a cybersecurity expert and it's in a very tight and restful environment. A lot of entrepreneurial DVD is are being done in those places and these people, after they get out of the army, they tend to becoming to produce themselves. They builders, they want to do something of their own and they create their own start up.

They take their own very unique set of skills in order to develop the right solutions that we solved real problems in the cybersecurity world. So I think that makes not extense. We see God sent. We have to get at the four clients, but telling is the background of the company on the reason why the technology came up close splace, because they were walking to see security forces protection. Process of the development is right and then the almost spin up the solution as to a product that can then be sold towards a company, the company that will we see the sort of cybers rights as a government or a country may have, so that that mixer. That makes a lot of sense in that and I think we are we do see a lot of the startup being created on the basis of always trying to innovate for, as you say the beginning of your of your own swer to me, innovate in always changing, fighting the next trap. So it's not just doing the commodity, but it's also creating industry solution, finding a new way to fight cyberspread, which is which makes a market very interesting. Coming back to an article that you published recently intech crunch, on out the shrining Saber security industry performing to some of the eighteen, one of the staffs that cut my eye was an increase of seventy six persons in funding for emerging tech companies or startups, as these growth come from more noticeable innovation. From your your belief or what are the technologies that's received the eyes amounts of funding and also why? Yeah, so this is the fourth year that we published ter annual report, which is called state of the CIBER nation reports. We're in a very unique position that we see, I would say, how dored percent of every security startups that are being founded in Israel and that are progressing in Israel. So we get a lot of data and and we find some very interesting insights and we published every in general, Israel entrepreneurs are known to be visionaries that's not just in cybersecurity...

...but in general and specifically when we talked about Cybersecurity, I think that is relatant. Nurse tend to have the ability to foresee what we be the biggest challenges in the cybersecurity world in the next few years. And once they do that, they come they have the right skis and the right technological background to come up with the right technologies. And when we and when we look at all the new startups that were founded in Israelian in two thousand and eighteen and we and the ones that already got funded, I would say that there are several trends that you can see. The first is that the world just becoming more and more connected and the pace of innovation, in the pace of adoption of new technologies, it just being increased. Okay, so, as organizations adopt new technologies, only a couple of years later so they started to realize that they lack security. So, for example, until a couple of years ago, enterprises were migrating slowly and slowly to the cloud. Then you saw new category of cybersecurity start ups that are dedicated your cloud environment. And these years we see it in Iot. Okay, there are different categories of Iot, of connected devices that are being introduced to the world. These devices are very vulnerable to cybersecurity attacks. So we saw this year's several categories within Iot and got funded and we saw a lot of evity. And, for example, medical devices, we saw several companies there, and automotive now, connected cars and autonomous vehicles to these are these are the trends that we see. More the tax surface is being changed, there are more and more connected devices, more and more opportunities for the bad guys, for say, to attack, and this is the right place to come up with innovative solutions that are very adequate to these new lens makes not expense. So pushing thing to that is in no environments that is always evolving with lots of innovasion coming. You mentioned clown. Mention all these things that are currently happening and reach one more...

...comple us. The grounds of moving to the problem obviously communicate things, but how do you guys keep on top of the stick, buge innovation and make sure that, I guess, you don't invest to earlier to late in a specific Verticolo, in specific table solution, right? So you know we're since that investors. So invest as early as possible, literally in two or three entrepreneurs with a powerpoint presentation. That's that's the stage at we come in an invest and we rely on several things when we make those seeds stage investments. First of all, we rely on the strength of the team, the fact that we have very good networkork here in Israel and we are able to understand what is the background of each more where he either served in the military or worked in the past few years. Adding of their background and when we look at the field, when we look at the problem space is that they're aiming to solve, that's where we rely on our network, as as I mentioned in the beginning, we have vast network of US based customers and mostly see cells chief information security officers of, say, Fortune five hundred companies and largest brands in the world. And as part of what the diligence process, we always introduce entrepreneurs to send between ten to fifteen customers, get their feedback and really do a very deep market validation process. And so even if there is still no product, just in an idea and general direction, we can reach very high level of certainty that there is, that did there is a big problem and indeed the general direction that the entrepreneurs are going after solve makes sense and customers like it. And now it's about execution and that's where relax. We rely on the on the scales of the team and of course we partner with them and provide them a lot of value addctivities. So all these introductions and go to market support in the US you cannot from some my next question, which is great. My next question was about how much ends you need...

...to be when you when you're invest with with the sea the seat stage, because we know that obviously at the seat stage you may have fantastic control product is being able from testing solution the good to market can be difficult to you. You actually also the question. So just going to move on to what we see into some mateen and the question will suit question between setting or being acquired, those fekeeping the company, keeping do or building up a legacy, if you will. So in two thousand and eighteen we saw lots of company being acquired. Just just to mention, if you and I'm just looking about this in the friend market, but we will have Davor being acquire by my bravel, the nine being acquired by checkpoint sec do ight by wild to, just to mention with you, and I believe that from not from Prono, your conspective, if there is a constant dinama between shock, the meetter long term makes it or building up legacy company. So I guess what I'm saying is that what you do? You build up a technology stopt to exit the technology start, or do you will the technology started in the view that you will be very successful and potentially create your own investment and go and I acquire your competitors to take on some more market share? So lookusher I've got for you is what are the science to? I don't sify if a company is ready to be stalled or if you should keep investing in his growth to become more established and more present in the market. Yeah, so this is this is an interesting question and of course it's not. It's not related, just a cyber security threaded to any many start up and any field in general. Right, I would say that it's even more relevant cyber security because this is a very ecquiditive market, quas a lot of men activity and we see that largest, large vendors, some of which you mentioned, are or a bit struggling to innovate on their own and they're very much relying on the cutting edge...

...startups of small startups to come up with the next big things, the next the next generation solutions and bed bed these companies within a much broader platform. So you kind of mentioned it earlier, but I would repeat the catch phrase that good companies don't get solved, they get acquired. Right and as an early sales investors and investors in general, I don't think that you want to build a company with a state of mind of a potential exit. I mean you don't build a company to get a choired, but you always think about what's the best way to build a sustainable business. I would say that in Cybersecurity specifically, it's quite hard because it's a very crowded space and there are a lot of a lot of big companies, a lot of competition and a lot of patients to to get acquired along the way. Yeah, and you know when you're doing something right as a startup usually you grow and and you get noticed by the large vendors. Usually happens when you displace a large vendor in a big customer or customer that stopped the decided not to purchase the big vendors product and in place and instead get get the startups product, then you start to step step on their toes and get on their radar and that then they become very interested in the space. And you know, you reach a point in time when you when you think whether it's now is the right time to sell, to get a quired heard or Eider, to raise an additional round of capital and go the way to the next level. And it's a very hard question. I mean there is no guarantee. You know, you always have to analyze the market and project and see see how your marker, how your specific monk it is going to look like the next few years. So, just for an example, if if a large vendor is interested to require your start up, okay, if you say no, there's a big chance that they will buy your competitor. So I would that change the landscape. Maybe then it would be harder for you to compete. That's something you need to consider. I will the landscape look in the next few years?...

Maybe other companies we step into your market and get some significant market share. So there are different elements that you need to take into considerations when you make that decision. As mentioned there. It's it's not very easy and it's not a clear cut there. It's not like a yes or no. But at the end of the day, and that's from my our perspective as investors, think that basically it's down to Preneur's decision. It's the founders decision. The founders are the ones who are they're the captains of the ship. There the heart and soul of the start up and they're the ones with the vision. And sometimes we may have disagreement. You know, somebody thinks that we need to raise more capital and go all the way. Another guy thinks that it's time to sell. You need to make a good discussion and be very analytical about it, but the end of the day this is the founders company and and we try to be supportive of any every decision that day they reach. Yeah, absolutely, but it's got to make sure your life wreat you excited. But I do agree with you. I think it's a it's a very active markets, almost almost aggressive sometimes, the way the way we see we see big company going after that quisition and trying to expand the port for you and because, by ways as well, we've seen that we've seen company at serving lots of companies at once with sin stems of the kinder time in the way they would they would make that position. But B it's interesting at the moment because we even see non security company being involving doing some that position. So when you see your Palowel to acquire an as of security company comes almost it's okay. When you see a recall or a companies, you will not see as the security players, such or even a Microsoft, acquiring and other security companies straight to where you realize that, okay, this is this is this is such an exciting market at everybody wants to have everybody wants to enter the play, if you will. But the next question I've got from you is them. It's part of the acquisition. So you mentioned companies are being...

...sold and some of those are being acquired. What would you advise to an acquire if they were to real started? Because I guess the reason why I'm asking you the push just to step back a little bit, we see two types of acquisition. We see acquisition where almost straight away the full team of the STARTUS is leading, the start of the service team is leading marketing teams leaving Exeter, ex which is a world acquisition where the start up is actually acting as a start to carry on doing what they are doing within the large organization pain that people growing and they actually use the resources of that large organization potentially good to be the clients exuch rights such. So I was wondering if you are a new device or the choir when these are this is a good acquisition, or some one into what's the best way to not only make that acquisition but also to get the most of the decosition. That's a very interesting question. I think that the most important thing is company culture. Yeah, I guess that if the start up that acquired, it means that they were doing something right, which means that they had something good going on, and the last thing a big company wants to do is to swallow small start up and crush it and to something that you sadly we see, we see sometimes, and I think that the you ask whether a big company should embed the start up in their in their organization, or either keep it as as a separate unit, almost autonomous unit, under under the roof a lot of different the resources apples. I would I would say that this is a mostly about company culture. If the if the acquiring company believes that they have they share the same value use and that they can, they're agile enough, in order to work together with this small unit of probly very skilled people, then the...

...synergy is high and they should swallow it and make it a one one function. I think that if there are a lot of if the gap is thick, for example, you mentioned before that you see a lot of non security companies acquire security startups. So, knowing that, in that scenario there's probably a big difference between how the large company operates, in how the start up operates and how the entrepreneurs would like to move you usually entrepreneurs, why, would like to move fast and be very agile, and large corporations are struggling to do that. Yeah, so if, if, if the reality tends more to be like that, I would advise to keep the start up as a as an autonomous function that can enjoy all the resources of the large company, like says, sales force and marketing power and so on. But if there is high synergy, if there if it's a big security company that already acquired several startups and there's a lot of entrepreneurial mentality going on, so I don't see a big concern in that. So, just to conclude it, it's all about making sure that this small and talent and team is able to keep doing the good stuff that they've been in the past few years and you need to enable them to do it in the best way and to enjoy the synergy of and all the good things that the corporations have that small set of dog consider not agree with you sing for that. We appreciate you your time and in sight today. On the deferent to bigger discuss now if anyone wants to connect with you, and no more about what we've discussed. So I'll find out more about way. Evenhos. What's the best way to connect with you? Yeah, you can reach me out there on my email. My email is off o fe or at my Adventurescom. Can read all about us, you know, website. I can see all of all of our companies in our strategy and free to reach out. Okay, that's one. Not For w many things once again. Now it was great to have younger should...

...thank you very much. It's been a pleasure. operatics has redefined the meaning of revenue generation for technology companies worldwide. While the traditional concepts of building and managing inside sales teams inhouse has existed for many years. Companies are struggling with a lack of focus, agility and scale required in today's fast and complex world of enterprise technology sales. See How operatics can help your company accelerate pipeline at operatics dotnet. You've been listening to BEDB revenue acceleration. To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. Thank you so much for listening. Until next time,.

In-Stream Audio Search

NEW

Search across all episodes within this podcast

Episodes (127)