Still Cyber Podcast Ep 02 – Inside Israel’s Cybersecurity Engine: Capital, Talent, and the Next Wave of Innovation

Hey everyone. Welcome to Still Cyber. I'm Alan Shimo.

And I'm Mitch Ashley. And we've been doing this a while. Yeah.

Still Cyber Baby. Still Cyber. Mitch, it's good to see you.

Happy New Year, man. Happy New Year. And, uh, you know, chalking up another circle around the sun and, uh, we're podcasting it still, So still it's awesome.

Still, still, cyber still podcasting. Hey, I wanna welcome our guest for this, uh, episode of Still Cyber. Her name is, or slo, uh, or is an analyst with YL Ventures, or welcome to Still Cyber.

It's great to have you on here. It's great to be here. Ellen and Mitch, thank you for having me.

Thanks for joining us. Appreciate it. Yeah.

Um, or before we jump into stuff, if you don't mind, give people a little bit kind of, of your background, your journey to being an analyst with ell, and though I look, I, I remember when Y first started Yil, to tell you the truth. Mm-hmm. Yeah.

You know, Mitch, you hired that old, but for people maybe don't know ell, maybe you can give him a quick recap of that as well. Yeah, for sure. I, I'll start for, uh, for my background.

So, uh, so I'm an analyst at Wild Ventures in the past, uh, two years. Uh, I live in Tel Aviv, uh, like, uh, all of the cyber security tech people here in Israel, right? Mm-hmm.

Um, so prior to that, I served in the 8,200 unit. Um, then I operated in several startups, uh, here in Israel, uh, as a security research security. I held security research, security analyst, uh, positions.

The last role was in the incident response department at Signia Signia Consulting. Uh, it's a company providing incident response, uh, service services, uh, I assume you've heard about it, but not in a best context in the past, uh, in the past couple. Yeah, Yes.

Offensive security and stuff like this. Yes. Yeah.

Yeah. And, um, uh, it's, it's an amazing company, uh, which exposed me to, uh, the recent, uh, trends and attacks, uh, right. Uh, companies are coming to, uh, to respond to incidents where the security stack failed to perform.

So I was in this, uh, interesting interject injection, sorry. Um, and yeah, I kind of did, uh, shift left, uh, in my career when, uh, when I chose to join Wild Ventures to see where the magic, uh, begins, uh, to invest in early stage cybersecurity. Yes.

So the, the YL ventures, if you don't mind me jumping in mm-hmm. Really sort of pioneered the, the model of investing in early stage Israeli based companies. Yeah.

With an eye towards helping them migrate or penetrate the North American, European, you know, rest of world market. And oftentimes that meant that at some point, some of the executives, maybe the sales and marketing team would, would be based in the us whether it was Boston or, or, or Silicon Valley or what have you. But r and d engineering research usually stayed in Israel, and also one of the very popular model, very successful first, very successful theme-based, um, yeah.

Venture funds centered around that as well as security. Yeah. Yeah.

So, so security always. Yeah. Yeah.

So, so, uh, so, so what you described, uh, really relates to, to well ventures and how, how we operate. So well, ventures been around since 2007. Uh, we're, uh, uh, top Israeli cybersecurity, uh, uh, vc, uh, in Israel.

Uh, we invest, uh, early stage, uh, seed investments in cybersecurity, as you said, uh, Israeli entrepreneurs, uh, only, uh, we're investing from our fifth fund, uh, now, which is, uh, $450 million. Uh, and, uh, what, what, what our expertise, what we bring to the table is our value add, uh, um, uh, program, which is, uh, here in Israel, we are responsible for investments and deal flow and, and, and pursuing new investments, but also supporting companies, uh, since the minute they get their, the, the check, they, they, they put the money in the bank. So we support them in, in product market feed, in marketing, in in hr, recruitments in operations, everything they need here in Israel.

And also we have, um, uh, uh, sites in San Francisco and in New York also that are responsible for this exact, uh, business development. Enter, keep nurturing our, uh, uh, great network of advisors, security practitioners that help us and advise us and our portfolio also. So the model of, of, of a typical, uh, cybersecurity startup also applied, uh, to us where the, the development and, and, and, and r and d sort of is here in Israel, and the, the business and the sales is in the US also.

Excellent. Yeah. So, Or you know, it, it's a great model and Vin the team has done, have done an amazing job.

We wanted to talk today though, about this report that just came out. Mm-hmm. Right.

Um, kind of, and this is not the first year. I don't know how many years while I was doing it, maybe you would know, but it, it's kind. This is the 10th edition, Alex, the 10th Edition's been a while.

My god, a 10th edition. Yeah. And it's kind of the state of the Israeli cyber investment scene, if you will.

Yeah, Yeah. Venture scene. Yeah.

Um, people can get it from the YL venture site if they go. Mm-hmm. But, or we don't have to dive really deep, deep, deep, but give us kind of the highlights, if you will.

Yeah, for sure. So, so as you mentioned, uh, the report is called, uh, the State of the Cyber Nation. Uh, so basically we, we've been collecting data throughout the entire year, and we released a report in the, in January of the following year to provide the most holistic view on what happened in Israel in cybersecurity in the past, uh, year.

Uh, we collect data up until the very last minute of the very last day of the, of the previous year, because I don't know if you've noticed, but December was, uh, was crazy in, in terms of funding and MNAs in Israel. So, uh, the ecosystem never rests, not even in No, uh, in, uh, holidays, in US holidays, Uhhuh. Um, so yeah, we collect the data, our position in the very core of the cybersecurity ecosystem expose us to, uh, to, to everything.

And we are able to provide the most accurate numbers and also insights and our projections for the following year. Um, so yeah, let's, let's talk about it. It's the 10th edition.

And, and, you know, I I I, I've been living in the data in, in the past, uh, weeks and, um, and, and so, um, um, you think that you have, that you have a gasp of, of the, the ecosystem. You, you get it, figure it out, and you know what's coming and what happened. And the numbers surprised even myself in, in the best way possible.

Um, this was the most active year in Israel, uh, in terms of funding and, and, and money entering here. 1 billion, uh, entering Israel, uh, over 136, uh, rounds, uh, which is the most rounds we've seen in the past decade. This is amazing.

And also, uh, we talked about it, uh, before that, uh, uh, 40% of all cybersecurity funding in the world, uh, was invested in Israel. And when, when you look at, at, at the map of the world, Israel is like a dot of dirt. Like w we are so small.

We are so small. So this is absolutely incredible. Uh, and I'm so grateful to be part of it.

Um, and, and We can, you know, one of the metrics or that that Yeah. I saw in the report, and we were talking off camera that I think really capture it is yeah, 40%, and if I'm wrong, correct me, 40% of all of the venture capital invested into cyber companies in 2025 went to Israeli based cyber companies. That's amazing.

That's unbelievable, Right? A country the size approximately of the state of New Jersey here in the us Right? 40 40, nearly half of all the cyber funding in the world.

Yeah, Ellen. And, you know, I think, I think, uh, our size is also our biggest trend, uh, because we talked about a little bit about, uh, why this is happening. How are, how is Israel so strong, uh, in cybersecurity, and why everyone are so eager to start their own companies and, and also are able to succeed and, and create category leading companies in cybersecurity.

So, um, uh, I I, I, I welcome you to, to come to Israel and, and walk the streets of the Tel IV and see the magic happens because Yeah, no, I've been there five or six times. I, I, I'm well aware. Um, and I have so many, so many friends, not just actually in the cyber market, cyberspace in Israel, but the, the DevOps community there, my friend Zeman runs the DevOps Tel Aviv DevOps community.

It's also a vibrant, vibrant rich community. Yeah. Not as much as the cyber, um, but you know, Mitch looking at one metric, the investment, the VC investment mm-hmm.

Let's call that money in, but you also gotta look at money out. What if, like, the exits this year, right? Well, you have The Wiz is a $30 billion, was it 32 or $36 billion?

32, I believe. Yeah, 32. Yeah.

Exit. So that's certainly, it's kind of a gravity, well, a gravity sinks that, that kind of brings it up. But it's not just the Wiz, how many, and I, I believe it's in the report or mm-hmm.

How many exits or liquidity events, uh, also in the, in this past year from Israeli based cybersecurity companies that were, you know, involved in m and a, uh, activity. Yeah. Yeah.

So, so we've seen a lot of exits also. And, and what's also surprising in, in this m and a activity in, in 2025, a trend that we've seen starting, uh, last year and and has been accelerating this year is, is the fact that, uh, Israeli cybersecurity startups are acquiring other Israeli cybersecurity startups, like consolidation within our ecosystem. So this, this represents, uh, I think like, um, um, a mature and independent market.

Uh, you've seen companies like Cato Networks that acquired, uh, aim Security, our company, this was our com portfolio company, aim, security, security for a, a company, uh, got acquired by Cato this year. Um, yes, Sierra that acquired also, uh, Israeli company, uh, Sandino, one that acquired from security, like big category leaders that choose to, to acquire Israeli startups within the ecosystem. Uh, we haven't seen, uh, a lot of, of those activities in the past.

And now in 2025, we've seen 12 of those acquisitions. Um, I think that's to go back to, to go back to, uh, to what we talked about earlier with, um, this is a proven market. This is no longer the, the startup nation.

We're the, the scale up nation. Uh, everybody, uh, believe they can build the next wi, the next Sierra, the next armies. Um, so, uh, there is also an ecosystem of, uh, second time entrepreneurs or, or serial entrepreneurs that are investing in new entrepreneurs, mentoring them.

Uh, this is a, like a cycle in never ends of, of, of nurturing and mentoring, uh, older entrepreneurs, new to new entrepreneurs. This is what fuels this ecosystem. And also the proven, uh, exits, right.

With armies, uh, CyberArk. Yeah. CyberArk also is this year plus Army.

That's a good point. Yeah. Yeah.

Um, you know, we, first of all, look, I encourage anyone watching or listening to this go, go download the report. See for yourself, the numbers are pretty, for sure, eye popping. But let, let's go beyond the numbers.

Why, why, you know, look, the whole, you, you could say the whole idea of how Israel was founded as a modern company, country, not company, a country in 1948 was a bit of a miracle in itself, right? There's a whole story. There's movies about it and everything else, but it, there really, there's a method.

There's a, there, there are several reasons why. Yeah. I think we, we see the Israeli cyber market, sys ecosystem community be so strong.

Mm-hmm. And it, I I think it, you mentioned your former 8,200. Yeah.

And I have to apologize, is there a unit 8,100 in cyber two, or is it just 8,200? There is a 8,200 unit, and there is also a unit called 81. Right?

Eight one. Okay. Eight one.

Okay. We, we are the hundred. I met people from both.

Yes. Yeah. Okay.

And that's why I always get confused, but you know, for those who look, most people I think in the cyber world have heard of it. For those who haven't. It's, it's kind of the Israeli version of the NSA, if you will.

Here we have the National Security Agency. Uh, but you know, it's a cyber unit that's responsible for both offensive and defensive mm-hmm. Cyber operations, and, you know, and the, and the IDF has a world renowned reputation for being one of the best, not the best when, when it comes to cyber.

So, you know, a lot of, a lot of the Israeli cyber talent comes out of those, those units. Yeah, for sure. However, That's not unique to Israel, right?

We have the NSA here and the NSA's big, there's a lot. Mm-hmm. The NSA has a big budget.

There's some of the smartest people in the world. I know, you know, I've, Mitchell and I have been to fort me. Mm-hmm.

And, uh, you know, we, we know the kind of people there, but not just the us European nations, uh, Asian nations. Every nation today has to have a cyber unit, right? Mm-hmm.

And, and, and a lot of these nations are a lot bigger, have more budget, have more people. What is it about the 8,200 or the IDF system, the Israeli culture? Or what is it that Yeah.

That helps you sort Of, I Think it's come Together. It's all combined. It's all combined, right.

You know, uh, the, the Israeli mental mentality, we are, uh, restless. Uh, no, but, but, uh, jokes, joke aside, I think that, um, I think that the, the mentality in the 8,200, uh, unit in those cyber units, um, is that there is nothing you can do. Uh, we are, uh, we're in a, in a complicated, uh, uh, geopolitical area, right.

Uh, to be gentle. Mm-hmm. And, uh, we need to, to protect ourselves, and we need to, to, to innovate and find ways to do that.

So the innovation and the, the innovation mentality starts as early as, uh, in the army, uh, where you, you need to find ways to, to, to innovate and, and to be the best and, and to protect yourself. And this mentality, uh, you, you leave the, the army with, with this, uh, can do approach. I can do anything.

I have the resources to do that. Um, and we talked about earlier about, um, this ecosystem that is, uh, very, uh, nurturing, uh, uh, older entrepreneurs are mentoring and investing in, in new entrepreneurs. Um, and also, uh, everyone, uh, wants to be, uh, the next with, we talked about that.

I think another aspect that is interesting to see, um, uh, also, uh, a rising trend that I, I'd love to, to dig deeper into is that, um, is the global VCs dominance in 2025, we've seen global VCs, uh, investing in cybersecurity in Israel, uh, as soon as seed stages. This is the first year that global VCs are invested more than Israeli VCs, um, in cybersecurity. Um, uh, so, so the, the majority of the money is global, uh, that entered, that invested in cybersecurity in Israel this year.

Um, and yeah, No, that this is a change. You're right. Because, you know, originally YV and of a handful of Israelis kind of had the inside track on all of these great new, you know, all the people coming at, like, you would think they were camped out in big cars outside the exit to 82.

Right. To 8,200 as they come out, you're writing checks and having them start, but no, every now it's not just the y and the other Israeli based funds. Yeah.

It's a fundamental change every Global. Yeah. I, it started, I remember I had a chance to meet the founders of Aramis Aramis, um, at an insight partners, uh, uh, uh, insight Ventures mm-hmm.

Uh, event in, in Iceland before COVID years ago. And at the time, insight had just bought an Israeli based company to help them do Israeli based cyber well, all Israeli based venture, but they're not even buying the Israeli companies. Every global VC now has an office in Tel Aviv.

Yeah. Or Herz Leah. Right?

Yeah. And, and, and so what did, it makes it a little harder for il, doesn't it? A lot more competition.

Mm-hmm. So, so yeah. So, so global VCs have been around, uh, always been around, but they, they, they used to invest in, in cyber in later stages.

Later, Yeah. Later stages. So the, the, the change here that is there writing checks now for, uh, two entrepreneurs with a presentation, like the seed stages, our stages mm-hmm.

Like the, the expertise of, of wild. Um, I think that it, it, it is a, it is an amazing change, and it's, it's, it's great that money keeps, uh, keeps entering here and investing in Israeli cybersecurity entrepreneurs. Uh, we, this led us to adopt, um, uh, a a split seed model that we've seen, uh, rising in the past couple of years.

And I believe that we'll keep, keep accelerating, uh, a model where, uh, uh, seed stage cybersecurity com, uh, uh, venture capital such as Wild ventures is co co-investing with, uh, top tier global VCs in seed stage. So the entrepreneurs, the entrepreneurs get like the best of both world. They get our expertise of the help of we understand the Israeli mentality, and we help them, uh, build their company since day one.

And they also get, um, uh, a global, uh, VC invested in C stage that is also also minded for later stages. Um, so they get the best of both, both world and, and we are not, uh, afraid that this will, um, this, that this will hurt our investments because, uh, we're experts in building companies, uh, from from day one here in Israel, and entrepreneurs understand our value. So the split seed also, it's an accelerator for them.

So we've seen it in the next, in the past couple of years. And, and it'll just keep, keep on growing, I believe. I agree.

It also makes for bigger seed rounds, right? Yeah. I recently interviewed an Israeli company, I'm trying to remember, I don't remember the name, but it was like an 80 something million dollar seed round or something like that, right?

It, it's nuts. I mean, Yeah. Another seed Used to be, yeah, they're not three four, I mean, a good, a seed round, $4 million was a good seed route.

Mm-hmm. Right? Yeah.

It kept you a ke it'll fund you for 18 months and, you know, 80 million nuts. Um, but you know what? So, or there are, there, there's 8,200, there's the Israeli entrepreneurial character in, in, you know, wanting to experiment and, and do things.

There's this environment of serial entrepreneurs and second, second growth, third growth companies. Yeah. But there's something else.

And Mitch, I, I'd love to hear you chime in on this, which is, I think what we see, what we saw in 2025 in the Israeli cyber scene is foretelling what we're gonna see in the world cyber scene in 2026 and and beyond, which is for a long time we heard, where's the innovation? Where's the innovation? Where's what's new in security?

Well, we, we're now seeing what's new in security. It's security, having the secure AI generated code, it's security having to defend against AI generated threats. It's security using ai Yeah.

To be more effective security. I think this is going to lead to increased budgets for companies buying security. It's gonna lead to more security, innovation, and security vendors doing new things.

It'll set off more m and a, more liquidity, more investment. Mitch, you speak to a lot of companies. What do you think I do, and I wanted to share with you, or that, um, we're just getting ready to launch our next update too, our, our buyer decision maker data, and mm-hmm.

For the first time, AI is actu, one of the things we ask is, uh, what are your plans for investing, either increasing significantly or slightly, or to stay the same, reduce across the number of technologies. AI and development is the top, top of the list, followed by security. Um, yeah, security's always up at the top.

Um, so for the first time, AI is, AI is kind of in the significant category, so people are ramping up dollars. So that, that creates a wide open, if not a field that you're already pursuing, of course, whether it's code security or ai agent control planes in the environment mm-hmm. That they work in and security guardrails.

You, you have such a even bigger, wide open new field to play in as well as traditional security. What's your perspective on that? Yeah, so, so, uh, we must talk about ai, right?

I, I heard someone says that, uh, this is the greatest, uh, uh, uh, revolution since the, the beginning of, of computers. Um, it's, it's not a bubble. It's not going anywhere, and it's just, uh, gonna accelerate and, and in our times, first come the technology and then come the security, right?

So we're in this, this area where the, the technology, and then we're building the security on top of it. So, um, so, so yeah, for sure. So security for ai, uh, was one of the, uh, of the top, uh, top leading trends, hot, hot spaces in, in cybersecurity in 2025.

Um, um, where, where we've seen, uh, lots of, of new startups, uh, rising. So if in the, the first wave of those security for AI companies, we saw companies like aim, security, our company, uh, prompt security, lasso security, that is, that are securing, securing, uh, the use in ai, uh, uh, uh, in corporate, corporate use of ai, if it's, uh, uh, true GPT or, or, or whatever, from prompt injections, from data leakage, um, basically securing, uh, AI responding to human input. Now, there is a new wave of security for ai, which is securing, um, uh, the, the, and governing, uh, the, the use of, of AI agents that are operating within your environment.

They're, they're practically autonomous employees that are accessing data. They have permissions. They, they are, um, they have access to assets.

They, they do tasks, uh, on behalf of employees. And, and then you need to, a way to find a way to govern it and control it. Um, yeah, we are moving to a, to an area where, uh, employees are, the, the tasks of employees are, are AI generated and human led.

Uh, and you need to find a way to, to govern it and control it Ing We're kind of creating sort of an open, wide open field of everybody using AI before we've really, truly feel like we've secured it while we're putting the new securities and measures in place That you're talking about For sure. Because it, it, it has so many, so many advantages like making, uh, uh, creating super employees, empowering employees, and making work much more efficient. Uh, you can do much more work, uh, in, in the same, in the same resources.

And we also see it in, in security, right? We've talked about, uh, AI enabling, uh, security, and we, we've seen also that in 20, 25 companies that use AI for better security solutions. And we will keep seeing that in the future also.

Yeah. I, I, you know, we're, we're running low on time, but I mean, suffice to say this is a rising tide. Mm-hmm.

Mm-hmm. That's gonna lift all boats, not just the Israeli cyber scene, but all the cybers. But when you already have that as it's almost a follow on wave to the momentum that's been building Yeah.

In the Israeli cyber scene. It, I think it's going to, I I can't wait to talk about the 2026 report. Yeah, me too.

That'll be interesting. For sure. Yeah, me too.

And, and you can see that, um, that the, that the Israeli, uh, cybersecurity ecosystem, we survived pandemic, and we survived war. And when we survived, uh, internal instability, if I, if I being gentle and we keep seeing, uh, we we're not just surviving those years, we're accelerating, thriving. Yeah.

Thriving. Yeah, exactly. So this give you a sense of, of the cybersecurity, uh, ecosystem mentality.

And, and, and I understand global VCs wanting, in wanting to, to get a bite of that. Absolutely. Yeah.

Or you know, what we didn't mention for people want to download the report. YL Ventures, what's the website? com.

Just access it and easy. It easy. Yeah.

Hey, thanks for being on Still Cyber with Mitch and I continued success to you, to yo to the YL team. Uh, we always watch we're fans and you have an invitation for the 2026 report. You'll come on and talk to us.

Yeah. All right. All Right.

Thank you guys. It was, thank you. It was great.

Thank you. Thank you. It was Slo and Ventures Mitchell.

Thank you. Crazy when you think about it, huh? I, oh boy.

I'm just thinking about all the investment conversations we've had with VCs over the years and how much this is such a huge factor in our market. And, you know, it was a boutique thing in Boulder, Colorado when we did still, still secure. Yeah, It was, well, Yel was a boutique thing back in 2007.

It, it was, I, I remember, I remember. Anyway, hey, I hope you've enjoyed this very, this episode of Still Cyber Mitch and I'll be back in about a week or so with more guests, more cyber news. Hey, RSA is coming in a couple months, so we'll be ramping up for that.

But until then, this is Alan Shimmel And Mitch Ashley, And you just listen to still Cyber.