Claroty completed the largest round of financing in Israel's technology sector this year, and Yossi Cohen joined its board of directors. It also acquired the startup Medigate-this is another Israeli cybersecurity company's largest acquisition of an Israeli cybersecurity company

Former Mossad CEO Yossi Cohen is currently in charge of local investment business at Japanese investment giant SoftBank. He will join the board of Israeli startup Claroty.

Claroty was founded in 2015 by the cyber venture capital group Team8, focusing on protecting industrial equipment and systems and critical physical infrastructure, including factories, production lines, water and energy infrastructure-these areas have been attacked by more and more hackers. Including ransomware attacks. The company's customers include pharmaceutical and food companies, car manufacturers, and critical infrastructure.

Cohen’s appointment came after Claroty recently concluded two outstanding deals within the local cyber security industry: it raised $400 million from SoftBank in the largest round of financing in Israel’s high-tech sector this year, which made Claroty The total amount of funds raised reached 635 million US dollars.

The company Laso announced the acquisition of Medigate, an Israeli medical network security company, for US$400 million to pay for the start-up company in the form of cash and stock. This is clearly the largest acquisition ever made by an Israeli company in the local cyber security market.

Claroty became a unicorn in June after raising $140 million at a valuation of more than $1 billion. The company did not report its valuation in this round of financing, but claimed that its valuation has doubled-estimated at US$2 billion to US$3 billion.

"Last year, our revenue, number of customers and number of employees have all doubled," said Yaniv Vardi, Claroty's CEO.

"During the pandemic, cyber attacks on industry have increased sixfold," Vardy said. "Industry is connecting more and more devices to the Internet to improve efficiency and competitiveness, but this makes it face troubles such as hackers."

Claroty is now planning to expand the products it develops and provides, and has a strong interest in the field of hospital network security. In recent years, attacks on such facilities have greatly increased. In fact, in Israel, a well-known ransomware attack occurred at the Hillel Yaffe Hospital in Hadera in October.

This is why Claroty bought Medigate, because the latter developed a system to protect hospitals and health organizations. These systems can supervise and control medical equipment and protect them from cyber attacks. Medigate was founded in 2017 by Jonathan Langer (CEO), Itay Kirshenbaum and Pini Pinhasov and raised a total of US$50 million. The company works with hundreds of hospitals around the world; its estimated annual revenue is tens of millions of dollars.

"They have a strong lead in this area. This is not a small acquisition, but we will work with leading companies in this area," Claroty's Vardi said.

After the acquisition is completed, 140 Medigate employees will join Claroty, which has 280 employees, bringing the total number of employees to 420.

"The purchase of Medigate is another step in Claroty's vision, which aims to protect all physical systems connected to the Internet in different industrial and health sectors and different organizational environments," said a company source.

The main link between the two companies is that both parties have expertise not only in the protection system, but also in mapping any equipment associated with the organizational system—whether it is a factory inspection system or a hospital’s diagnostic equipment. "Security managers in these places don't know what is connected to the Internet, and you cannot protect what you can't see. This is our competitive advantage: map these networks and immediately identify their vulnerabilities," Vardi points out.

The major challenge for Claroty and Medigate is that critical infrastructure is often an attractive target not only for hackers but also for countries, governments, and intelligence organizations with advanced and complex resources and cyber attack capabilities. This makes it more difficult to protect such infrastructure.

"We know how to protect ourselves, even if we are attacked by foreign countries," Vardy said. "Industrial companies, food manufacturers, and hospitals connect unprotected products to the Internet, exposing them to hackers, no matter who they are. The vector open to hackers is the same vector, whether it is a country or a group of criminals."

Claroty also has to deal with a lot of competition. Its challengers include Israeli companies Axonius and Aramis, which are engaged in IoT (Internet of Things) security and protection of Internet-connected devices, and Nozomi Networks, an industrial-focused American company, which competes with Claroty in most of its business. After acquiring the Israeli company CyberX, Microsoft has also recently entered this field.

As far as Vardi is concerned, he firmly believes that after the acquisition of Medigate, Claroty will be able to provide a more comprehensive network security solution than its competitors. The company cited a report by technology research company Gartner, focusing on the protection of critical infrastructure. According to the report, 80% of critical infrastructure-related companies will abandon their existing cyber security providers in order to better deal with physical facilities and information risks by seeking inclusive solutions.

Claroty was co-founded by the company's former CEO Amir Zilberstein and current active board member Amir Zilberstein, as well as Benny Porat, vice president of technology, and Galina Antova, vice president of business development. Vardi himself will become CEO in 2020. This round of investment was led by SoftBank's Vision Fund 2, Bessemer Venture Partners and Schneider Electric. Current investors ISTARI, Team8 and Standard Investments (formerly North 40) also participated.

Venture funds investing in Medigate include Blumberg Capital, USVP, Partech, YL Ventures and Maor Investments.

Yossi Cohen, the former Mossad head overseeing SoftBank Israel’s activities, said: “Initiatives involving digital transformation are currently pushing us to rely on important physical systems that meet basic needs. Therefore, protecting these systems will ultimately reduce the impact on human life. risk."

Nadav Zafrir, Founder and CEO of Team8, added: “Following the previous round of fundraising, Claroty’s actions to protect the health service sector have further consolidated its position as the world’s leading industrial cyber security platform for a wide range of organizations. "