Many offices in downtown Tel Aviv celebrated earlier this week the publication by the Wall Street Journal of a story that Google is in advanced negotiations to buy Wiz for a whopping $23 billion. This is great news for all Israelis, who will benefit from the taxes paid by the company’s founders and employees if and when the deal is signed. However, some Israelis will gain a little more, including some of Wiz’s competitors. The list of surprise beneficiaries of the Wiz-Google deal clearly illustrates just how closed and cohesive the Israeli cyber industry is. One could even say that it is a “clique” that has been forged not only in the trenches of Startup Nation but also in the corridors of IDF units like 8200 and 81, where the Israeli and global cyber reserve is built.
According to data released Wednesday by Startup Nation Central, even before this historic deal, Israel had surpassed the United States in terms of the ratio of investments in cyber companies. In 2018, cyber was responsible for 20% of all capital raisings in Israel and the United States. Over time, the sector’s share in the United States has decreased to 13%, while in Israel it has been steadily increasing. In the first half of 2024, cyber investments accounted for half of all capital raisings in the Israeli ecosystem. In many cases, these startups are founded by former soldiers from Units 8200 and 81, while in some cases, the founders are repeat entrepreneurs. So who are the Israelis benefiting from the local “cyber gang” thanks to the Wiz deal?
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Nir Zuk (right) and Omri Casspi.
(Photo: Ryan Purvis and Oz Mualem)
The most surprising name is Nir Zuk, the founder of Palo Alto Networks, the largest cybersecurity company today, valued at $110 billion on Wall Street. Zuk is a limited partner in Gili Raanan’s Cyberstarts venture capital fund, which was one of Wiz’s early investors. According to unofficial data, Cyberstarts owns 4% of Wiz’s shares, which will be worth $900 million in the Google deal after selling half of its stake to Blackstone in 2021. Ironically, Palo Alto is one of Wiz’s main rivals and is one of the reasons for the sale: competition with Zuk’s company is fierce. Palo Alto, thanks to its size and deployment in all areas of cybersecurity except identity management, has become a market leader and has recently decided to give away some products for free, pushing the consolidation of the cybersecurity market. It’s hard for Wiz to go it alone against Palo Alto, which can offer its version of cloud security for almost free while making money on other products. Wiz has also tried to build a broader platform by emulating Palo Alto’s acquisition strategy, but is only just beginning that journey after failing to buy SentinelOne or Lacework. Zuk, who admittedly doesn’t need this exit to get rich, will benefit twice over: both personally through his investment in Cyberstarts and by eliminating a powerful competitor. Google will integrate Wiz’s solution as part of its cloud value proposition and will not compete directly with Palo Alto. Along the way, Wiz will also stop “antagonizing” Zuk with rapidly changing valuations, much like Zuk once did with Gil Shwed, his former boss at Check Point, which now has a market cap of “only” $19 billion. Two years ago, Zuk said in an interview with Calcalist: “If Wiz is worth $6 billion, Palo Alto is worth a trillion.”
Shlomo Kramer is another “old hand” of the Israeli cyber club, who, along with Shwed and Marius Nacht, founded Check Point, retired, founded Imperva (which was also sold), and then founded Cato Networks. He has recently been competing with Wiz to become the next big cyber IPO on Wall Street. Kramer has also invested privately in Cyberstarts and is expected to see a quick return on his investment in the four-year-old company. Unlike Check Point, Cato is not in direct competition with Wiz, but the current exit still brings Kramer additional profits. The Google deal will set a new standard for multiples in the cyber market and could attract an attractive buyer for Cato or allow it to obtain a higher valuation in the IPO. Cato was valued at $3 billion in its last fundraising round and is targeting a valuation of $5-6 billion in the IPO. Cato’s income rate is roughly half of Wiz’s.
Mickey Boodaei is one of the most successful entrepreneurs and investors in the local cyber world. He co-founded Trusteer, which was sold to IBM for over $600 million, and Transmit Security, where he is now CEO and co-founder, which is also a unicorn in identity and access management. Boodaei is considered a successful investor, having made most of his investments independently. Boodaei also invested in Gili Raanan’s Cyberstarts, so he will benefit from the fund’s huge profit on Wiz. Interestingly, Boodaei and Rakesh Loonkar, both long-time partners and founders of Transmit Security, and Island founders Dan Amiga and Michael Fay, recently launched Picture Capital, a new investment fund that will compete with Raanan’s fund. The fund has raised $120 million to invest in early-stage cyber companies, with Boodaei and Amiga primarily investing in the fund and Loonkar managing it after retiring from Transmit.
Yevgeny Dibrov, co-founder and CEO of cybersecurity firm Armis, has been friends with Assaf Rappaport since their days working in the intelligence community’s Unit 81. Rappaport was Dibrov’s team leader and later recruited him as one of the first employees at Adallom, the first company founded by the Wiz founders, which was sold to Microsoft for $320 million five years ago. Dibrov will benefit from this exit twice. He invested directly in Wiz during one of the fundraising rounds and is also invested in Cyberstarts. Rappaport, by the way, personally invested in Armis early on and still owns shares today, with Armis valued at $3.4 billion in its most recent fundraising round.
Marius Nacht, the third member of the Check Point trio, has in recent years moved away from the cyber sector, devoting his personal fortune to life sciences and the digital bank he co-founded with Amnon Shashua but from which he withdrew before its launch. A few years ago, he founded the venture capital fund aMoon, which specialises in investments in the medical field, but he has continued to invest privately in Cyberstarts.
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Merav Bahat.
(Photo: Chicbox Photography)
Dazz founder and CEO Merav Bahat is among the beneficiaries of the deal. Bahat previously ran Microsoft’s cyber business with Wiz CEO Assaf Rappaport. She is believed to have invested directly in Wiz in its early days and is expected to book a multi-million dollar profit once the exit is complete.
7. Nadir Izrael and Michael Shaulov
Nadir Izrael and Michael Shaulov are other prominent names from the cyber community on the list of future beneficiaries of the Wiz deal, as they belong to the Gili Raanan investor club. Izrael, Dibrov’s partner in founding Armis, also invested in Cyberstarts. Izrael, who served in Unit 8200, is Armis’ CTO. Michael Shaulov is the CEO of Fireblocks, his cyber unicorn, which was valued at $8 billion in its last funding round. Zuk, Boodaei, Amichai Shulman, Kramer, and Dibrov invested in Shaulov’s startup in its early days. Prior to that, Shaulov sold his previous startup, Lacoon, to Check Point for $100 million in 2015.
Amichai Shulman co-founded cybersecurity company Imperva with Shlomo Kramer. After its sale, Shulman briefly stayed at the company before becoming an entrepreneur and investor, with the Cyberstarts fund among his investments.
Omri Casspi, the first Israeli basketball player to play in the NBA, has been expanding his presence in high-tech investments. He joined Raanan’s fund early on. Casspi has his own venture capital fund Sheva, which has raised $50 million. While competing for investments in new cybersecurity companies, Casspi will benefit from Cyberstarts’ extraordinary profit on Wiz.
Entrepreneur Ofer Ben Noon, who recently sold Palo Alto-based Talon Cyber Security for about $600 million, will benefit from the exit through his investment in Gili Raanan’s cyber fund.