Another day, another private equity cybersecurity investment. On Wednesday, Sweden’s EQT, the real assets and private equity investor with EUR 52 billion (around $63 billion) in managed client assets, announced that its private equity arm is investing approximately $100 million in Israeli cybersecurity firm CYESEC (known as CYE).
The growth investment is being made via the EQT Mid Market Europe fund, which targets control or co-control investments in high-quality, midsized companies (predominantly in Europe) with an enterprise value between EUR 100-300 million. Existing portfolio companies in the fund include Spanish telecom fiber provider Adamo, German cybersecurity firm Utimaco, and Switzerland-based threat-detection firm Open Systems.
CYE’s founder and CEO Reuven Aronashvili will retain a significant share in the company, which he will continue to lead along with the existing management team.
First Israeli commitment
The investment, which marks EQT Private Equity’s first investment in Israel, will support CYE’s growth plans and help accelerate its go-to-market and product investments.
Headquartered in Tel Aviv, Israel and with offices in Europe and the US, CYE advises medium-sized and Fortune 500 companies around the globe, as well as EQT itself and many of its portfolio companies. Founded in 2012, CYE offers automated and continuous cyber assessments based on AI and machine learning technology, coupled with “professional services from world-leading cybersecurity experts”–a big data/human discretionary hybrid combination that EQT notes is unique in the market.
Per its website, CYE advises clients including multinational firm Philips, financial services firm UBS and the World Economic Forum. In 2020–a watershed year for cybersecurity challenges globally–CYE grew its team by 25 percent and doubled its customer base.
In a statement announcing the investment, EQT observed that the world of cybersecurity threats is “changing rapidly with attacks growing in complexity, sophistication and frequency,” and accelerating since the outbreak of covid-19. A shift in more people working from home has increased the number of potential attack vectors, with a resulting surge in security breaches leading to a significant increase in financial and reputational damages for organizations.
“Today’s cybersecurity environment is defined by highly skilled hackers who are able to circumvent the most sophisticated systems, making continuous penetration testing a prerequisite for a robust cybersecurity risk posture,” EQT said in a statement. “As digital infrastructure continues its transition to the cloud and gains complexity, the importance of penetration testing will only increase going forward, placing CYE in an excellent position to capture significant market growth.”
EQT’s investment will help CYE to grow its global customer base, accelerate go-to-market investments, invest in product extensions across critical cybersecurity verticals, and drive consolidation of the fragmented cybersecurity space.
“The backing of CYE marks EQT’s first deal in Israel, which is a highly attractive market for technology investments, and a country in which EQT intends to increase its activity going forward,” EQT Partner Florian Funk said. “We have followed CYE’s development closely over the last years and we are truly impressed with the company Reuven and his team have built to date. Their approach of pairing AI-based technology, services and world-class cyber expertise is unique in the marketplace and well-positioned for continued accelerated growth.
“We are proud to support CYE with both capital and competence, as this investment aligns perfectly with EQT’s thematic investment focus and ambition to back high growth companies by partnering with world class management teams. We are excited to embark on this journey of building a global cybersecurity champion jointly”.
“As hackers increasingly deliver devastating attacks, causing millions of dollars in lost revenue and productivity, CEOs of companies around the world have come to understand that accurately assessing cyber risk begins with them,” said CYE CEO Reuven Aronashvili. “We are well past the point where companies can limit cyber threats to one department. Today’s attacks can hit the core of any business, essentially crippling the company. At CYE, we are laser-focused on building a company that fundamentally changes the way companies and organizations approach cybersecurity, enabling them to accurately assess the most urgent threats to their business. As we continue to build on this foundation, we are thrilled to welcome EQT as our new partner and are very excited to kickstart CYE’s next phase of expansion and innovation and look forward to working together to make today’s organizations safer.”
Earlier this week, Canada’s Brookfield Asset Management invested through its tech VC arm in connected device cybersecurity firm Armis.
