Investors like Walmart and Microsoft back Team8’s cybersecurity venture studio with $85 million

The Israeli cybersecurity venture studio Team8 has raised $85 million in new financing from a clutch of new and returning strategic investors including Walmart, Airbus, SoftBank, and Microsoft’s investment arm, M-12. The studio’s plans to raise a larger fund were first reported by PEHub in May. Team8 has long believed that by combining the strengths and security […]

The Israeli cybersecurity venture studio Team8 has raised $85 million in new financing from a clutch of new and returning strategic investors including Walmart, Airbus, SoftBank, and Microsoft’s investment arm, M-12.

The studio’s plans to raise a larger fund were first reported by PEHub in May.

Team8 has long believed that by combining the strengths and security interests of strategic corporate partners it could develop better cybersecurity solutions (or companies) that would be attractive to its investors and clients.

Indeed, that was the thesis behind the $23 million that Team8 raised in 2016 when it was still proving out the model.

The company’s previous rounds of funding managed to bring Cisco Investments, Bessemer Venture Partners, Innovation Endeavors and Alcatel-Lucent into the fold. Now banks like Scotiabank and Barclays, ratings agencies like Moody’s, and insurers like Munich Re are coming on board to add their voices to the chorus of wants and needs that keep the crack cybersecurity experts from Team8 churning out new companies.

This model, of partnering with the corporate clients who will become the customers of the startups that Team8 creates isn’t confined to the security industry, but it’s where the idea has already created successful outcomes for all parties.

Earlier this month, Temasek (also a Team8 investor) acquired Sygnia, a company from the venture studio’s portfolio that had only emerged from stealth a year ago, for $250 million.

As we’d written at the time, Sygnia was typical of a Team8 investment. The company had only secured $4.3 million in funding and it was staffed by elite security specialists from Israel. Shachar Levy (who was the chief executive), Ariel Smoler, Arick Goomanovsky and Ami Kor, with its chairman Nadav Zafrir, the co-founder and CEO of Team8 and a former commander of Unit 8200.

Zafrir and Sachar are both full-time members of Team8 along with Israel Grimberg, Liran Grinberg, Assaf Mischari, a former technology leader in Unit 8200, and Lluís Pedragosa, former partner at Marker LLC.

The Tel Aviv-based company has invested in four companies that are currently selling their wares on the open market and has another four that are still operating in stealth mode. IN all, the group has raised $260 million to date, and employs 370 people around the world.

What is seemingly unprecedented is the level of cooperation among organizations with the Team8 organizations to identify threats and develop technologies that can respond to them.

According to a statement announcing the fund’s launch, companies investing into Team8 will be required to contribute insights from their Chief Information, Technology, Data and Security Officer to identify problems, develop solutions, and work on sales and marketing services for these new businesses.

“Rogue states, hackers, terrorists and criminals are intent on wreaking physical, financial and societal havoc and catastrophic damage on governments, corporations and individuals,” said Eric Schmidt, Founding Partner of Innovation Endeavors, a lead investor in Team8, in a statement. “As data continues to proliferate and our technical capabilities expand, cyber attacks and wars will increase in number and intensity.”

Vector of Internet Security Systems

Team8 investors are required to nominate a “senior champion” from their business unit in addition to the corporate venture capital or corporate development team, to guide the partnership and provide executive mindshare for the mutual work together.

As shared owners in Team8 companies, these investors are deeply invested in ensuring only the best ideas, technologies and companies are created. Besides meeting in person and as a group throughout the development process of new companies, strategic investors bring their chief executives to Israel as well as host Team8 and its portfolio companies for workshops at their headquarters for continuous knowledge-sharing and strategy building, according to a Team8 spokesperson.

And the company will be expanding its focus beyond just cyberdefense thanks to its latest funding and its new partners.

“Going forward, we will continue to focus on the enterprise, but not necessarily just defense,” a spokesperson for the company wrote in an email. “The indirect impact of cyber on the enterprises are the missed opportunities to experiment, integrate and onboard new technologies because of security, compliance and fear of exposure. We’re currently working on zero-trust networks for multi-cloud environments, secure on-ramping of blockchain, safe collaboration on sensitive data; and rethinking how machine learning can significantly impact the business. These are designed with built in security, data science, and intelligence, to allow companies to prosper and not be inhibited by security controls.”

Investors like Walmart and Microsoft back Team8’s cybersecurity venture studio with $85 million

The Israeli cybersecurity venture studio Team8 has raised $85 million in new financing from a clutch of new and returning strategic investors including Walmart, Airbus, SoftBank, and Microsoft’s investment arm, M-12. The studio’s plans to raise a larger fund were first reported by PEHub in May. Team8 has long believed that by combining the strengths and security […]

The Israeli cybersecurity venture studio Team8 has raised $85 million in new financing from a clutch of new and returning strategic investors including Walmart, Airbus, SoftBank, and Microsoft’s investment arm, M-12.

The studio’s plans to raise a larger fund were first reported by PEHub in May.

Team8 has long believed that by combining the strengths and security interests of strategic corporate partners it could develop better cybersecurity solutions (or companies) that would be attractive to its investors and clients.

Indeed, that was the thesis behind the $23 million that Team8 raised in 2016 when it was still proving out the model.

The company’s previous rounds of funding managed to bring Cisco Investments, Bessemer Venture Partners, Innovation Endeavors and Alcatel-Lucent into the fold. Now banks like Scotiabank and Barclays, ratings agencies like Moody’s, and insurers like Munich Re are coming on board to add their voices to the chorus of wants and needs that keep the crack cybersecurity experts from Team8 churning out new companies.

This model, of partnering with the corporate clients who will become the customers of the startups that Team8 creates isn’t confined to the security industry, but it’s where the idea has already created successful outcomes for all parties.

Earlier this month, Temasek (also a Team8 investor) acquired Sygnia, a company from the venture studio’s portfolio that had only emerged from stealth a year ago, for $250 million.

As we’d written at the time, Sygnia was typical of a Team8 investment. The company had only secured $4.3 million in funding and it was staffed by elite security specialists from Israel. Shachar Levy (who was the chief executive), Ariel Smoler, Arick Goomanovsky and Ami Kor, with its chairman Nadav Zafrir, the co-founder and CEO of Team8 and a former commander of Unit 8200.

Zafrir and Sachar are both full-time members of Team8 along with Israel Grimberg, Liran Grinberg, Assaf Mischari, a former technology leader in Unit 8200, and Lluís Pedragosa, former partner at Marker LLC.

The Tel Aviv-based company has invested in four companies that are currently selling their wares on the open market and has another four that are still operating in stealth mode. IN all, the group has raised $260 million to date, and employs 370 people around the world.

What is seemingly unprecedented is the level of cooperation among organizations with the Team8 organizations to identify threats and develop technologies that can respond to them.

According to a statement announcing the fund’s launch, companies investing into Team8 will be required to contribute insights from their Chief Information, Technology, Data and Security Officer to identify problems, develop solutions, and work on sales and marketing services for these new businesses.

“Rogue states, hackers, terrorists and criminals are intent on wreaking physical, financial and societal havoc and catastrophic damage on governments, corporations and individuals,” said Eric Schmidt, Founding Partner of Innovation Endeavors, a lead investor in Team8, in a statement. “As data continues to proliferate and our technical capabilities expand, cyber attacks and wars will increase in number and intensity.”

Vector of Internet Security Systems

Team8 investors are required to nominate a “senior champion” from their business unit in addition to the corporate venture capital or corporate development team, to guide the partnership and provide executive mindshare for the mutual work together.

As shared owners in Team8 companies, these investors are deeply invested in ensuring only the best ideas, technologies and companies are created. Besides meeting in person and as a group throughout the development process of new companies, strategic investors bring their chief executives to Israel as well as host Team8 and its portfolio companies for workshops at their headquarters for continuous knowledge-sharing and strategy building, according to a Team8 spokesperson.

And the company will be expanding its focus beyond just cyberdefense thanks to its latest funding and its new partners.

“Going forward, we will continue to focus on the enterprise, but not necessarily just defense,” a spokesperson for the company wrote in an email. “The indirect impact of cyber on the enterprises are the missed opportunities to experiment, integrate and onboard new technologies because of security, compliance and fear of exposure. We’re currently working on zero-trust networks for multi-cloud environments, secure on-ramping of blockchain, safe collaboration on sensitive data; and rethinking how machine learning can significantly impact the business. These are designed with built in security, data science, and intelligence, to allow companies to prosper and not be inhibited by security controls.”

Venture capital investment in US companies to hit $100B in 2018

So many new unicorns valued at $1 billion-plus, countless $100 million venture financings, an explosion of giant funds — it’s no surprise 2018 is shaping up to be a banner year for venture capital investment in U.S.-based companies. There are more than 2.5 months remaining in 2018 and already U.S. companies have raised $84.1 billion — more […]

So many new unicorns valued at $1 billion-plus, countless $100 million venture financings, an explosion of giant funds — it’s no surprise 2018 is shaping up to be a banner year for venture capital investment in U.S.-based companies.

There are more than 2.5 months remaining in 2018 and already U.S. companies have raised $84.1 billion — more than all of 2017 — across 6,583 VC deals as of Sept. 30, 2018, according to data from PitchBook’s 3Q Venture Monitor.

Last year, companies raised $82 billion across more than 9,000 deals in what was similarly an impressive year for the industry. Many questioned whether the trend would — or could — continue this year, and oh, boy has it. VC investment has sprinted past decade-highs and shows no signs of slowing down.

Why the uptick? Fewer companies are raising money, but round sizes are swelling. Unicorns, for example, were responsible for about 25 percent of the capital dispersed in 2018. Those companies, which include Slack, Stripe and Lyft, have raised $19.2 billion so far this year — a record amount — up from $17.4 billion in 2017. There were 39 deals for unicorn companies valuing $7.96 billion in the third quarter of 2018 alone.


Some other interesting takeaways from PitchBook’s report on the U.S. venture ecosystem:

  • Nearly $28 billion was invested into early-stage startups in 2018, with median deal size increasing 25 percent to  $7 million last quarter.
  • Ten funds have raised more than $500 million this year and another five, including Lightspeed Venture Partners and Index Ventures, have closed on more than $1 billion.
  • Companies based on the West Coast were responsible for 54.7 percent of deal value in 3Q but other regions are catching up: New England (12 percent), the Mid-Atlantic (20 percent) and The Great Lakes (5 percent).
  • Investment in U.S. pharma and biotech has reached a new high of $14 billion already in 2018.
  • Corporate venture capital activity is heating up. This year, CVCs invested $39.3 billion in U.S. startups, more than double the $15.2 billion invested in 2013.
  • VC-backed companies are exiting via buyouts more than ever.

Corporate venture investment climbs higher throughout 2018

Many corporations are pinning their futures on their venture investment portfolios. If you can’t beat startups at the innovation game, go into business with them as financial partners.

Though many technology companies have robust venture investment initiatives—Alphabet’s venture funding universe and Intel Capital’s prolific approach to startup investment come to mind—other corporations are just now doubling down on venture investments.

Many corporations are pinning their futures on their venture investment portfolios. If you can’t beat startups at the innovation game, go into business with them as financial partners.

Though many technology companies have robust venture investment initiatives—Alphabet’s venture funding universe and Intel Capital’s prolific approach to startup investment come to mind—other corporations are just now doubling down on venture investments.

Over the past several months, several big corporations committed additional capital to corporate investments. For example, defense firm Lockheed Martin added an additional $200 million to its in-house venture group back in June. Duck-represented insurance firm Aflac just bumped its corporate venture fund from $100 million to $250 million, and Cigna lust launched a $250 million fund of its own. This is to say nothing of financial vehicles like SoftBank’s truly enormous Vision Fund, into which the Japanese telecom giant invested $28 billion of its own capital.

And 2018 is on track to set a record for U.S. corporate involvement in venture deals. We come to this conclusion after analyzing corporate venture investment patterns of the top 100 publicly traded, U.S.-based companies (as ranked by market capitalizations at time of writing). The chart below shows that investing activity, broken out by stage, for each year since 2007.

A few things stick out in this chart.

The number of rounds these big corporations invest in is on track to set a new record in 2018. Keep in mind that there’s a little over one full quarter left in the year. And although the holidays tend to bring a modest slowdown in venture activity over time, there’s probably sufficient momentum to break prior records.

The other thing to note is that our subset of corporate investors have, over time, made more investments in seed and early-stage companies. In 2018 to date, seed and early-stage rounds account for over 60 percent of corporate venture deal flow, which may creep up as more rounds get reported. (There’s a documented reporting lag in angel, seed, and Series A deals in particular.) This is in line with the past couple of years.

Finally, we can view this chart as a kind of microcosm for blue-chip corporate risk attitudes over the past decade. It’s possible to see the fear and uncertainty of the 2008 financial crisis causing a pullback in risk capital investment.

Even though the crisis started in 2008, the stock market didn’t bottom out until 2009. You can see that bottom reflected in the low point of corporate venture investment activity. The economic recovery that followed, bolstered by cheap interest rates that ultimately yielded the slightly bloated and strung-out market for both public and private investors? We’re in the thick of it now.

Whereas most traditional venture firms are beholden to their limited partners, that investor base is often spread rather thinly between different pension funds, endowments, funds-of-funds, and high-net-worth family offices. With rare exception, corporate venture firms have just one investor: the corporation itself.

More often than not, that results in corporate venture investments being directionally aligned with corporate strategy. But corporations also invest in startups for the same reason garden-variety venture capitalists and angels do: to own a piece of the future.

A note on data

Our goal here was to develop as full a picture as possible of a corporation’s investing activity, which isn’t as straightforward as it sounds.

We started with a somewhat constrained dataset: the top 100 U.S.-based publicly traded companies, ranked by market capitalization at time of writing. We then traversed through each corporation’s network of sub-organizations as represented in Crunchbase data. This allowed us to collect not just the direct investments made by a given corporation, but investments made by its in-house venture funds and other subsidiaries as well.

It’s a similar method to what we did when investigating Alphabet’s investing universe. Using Alphabet as an example, we were able to capture its direct investments, plus the investments associated with its sub-organizations, and their sub-organizations in turn. Except instead of doing that for just one company, we did it for a list of 100.

This is by no means a perfect approach. It’s possible that corporations have venture arms listed in Crunchbase, but for one reason or another, the venture arm isn’t listed as a sub-organization of its corporate parent. Additionally, since most of the corporations on this list have a global presence despite being based in the United States, it’s likely that some of them make investments in foreign markets that don’t get reported.