Gili Raanan doesn’t want to hear about your accomplishments, the minutiae of your startup idea, or the size of the market you're chasing.
At least, not at first. It’s not that he’s not interested in those things, it’s that—to start—he’d rather know who you are. He wants to hear about your early life, your family, your relationships, and your hobbies. Raanan wants to know who you love, what you love, and why.
"Most people, when I meet them for the first time, they share their achievements," said Raanan. "But I always focus on the why…I get to know them. I focus on their failures, and I focus on their feelings. You know, young techies aren’t accustomed to speaking about their feelings, but I try to talk to them, to understand how they feel about different elements in their lives. The deeper they are, it makes me believe they’re more capable of dealing with the challenges ahead."
It’s slightly surprising for someone with Raanan’s technical credentials. In the 1990s, Raanan was one of the inventors of the technology that came to be known as CAPTCHA, and built the first web application firewall. He later founded and sold NLayers to EMC Corporation, and then joined Sequoia Capital for almost a decade. In 2018, Raanan set up shop on his own, founding early stage-focused Cyberstarts. Since, the Israel-based firm has been the earliest check in unicorns like Island and Cyera, and cloud security juggernaut Wiz.
Now, Cyberstarts has raised $60 million for its fourth seed fund, Fortune has exclusively learned. This news brings Cyberstarts’ assets under management to $720 million total. Additionally, former Okta Chief Revenue Officer Adam Aarons is joining Cyberstarts as an operating partner, working alongside Raanan and general partners Lior Simon, Hila Zigman, and Emily Heath. The firm’s LPs include Wiz cofounder and CEO Assaf Rappaport, Palo Alto Networks founder Nir Zuk, and "Godfather of Israeli Cybersecurity" Shlomo Kramer.
"I had to disappoint a lot of prospective investors who we couldn't accommodate, and I think it highlights that the demand for cybersecurity is at its record peak," said Raanan. "When I started Cyberstarts, cybersecurity wasn’t hot. Investors stayed away, it was considered a boring thing."
How times change. The runaway success of companies like Wiz and the successful IPOs of companies like Rubrik keep drawing attention to the space. If you look at CrowdStrike’s 2024 Global Threat Report, both the speed and scale of cyberattacks continues to accelerate, a trend likely to strengthen as geopolitical tensions rise. Raanan also says there’s another dynamic at play: Some estimates suggest that only 15% of organizations have fully migrated to the cloud.
"We still expect a massive adoption of cloud-based technology, which is a huge opportunity for cybersecurity companies," said Raanan.
Cyberstarts’ rapid ascension hasn’t been without controversy, due to the firm’s executive advisory program, Sunrise. In the program, CISOs from major companies (with approval from those companies) spend time with Cyberstarts founders to discuss potential solutions to industry challenges, with the goal of helping them find product-market fit faster.
The industry practice of courting CISOs for advice is common, but Sunrise’s compensation model has attracted criticism—previously, CISOs received fund-level points in exchange for their time. This part of the program was scrapped earlier this year, Raanan confirms to Fortune. I pressed him: What does he say to those who call Sunrise kickbacks?
"It’s simply not," Raanan said. "The Sunrise program is all about spending time, and providing product feedback to entrepreneurs with some wild ideas. It's completely detached from the commercial aspects of the business."
In some ways, I wonder if the situation echoes the resentment faced by Hollywood horror powerhouse Blumhouse, where competitors argue that its high-efficiency model creates unfair advantages. But wherever you stand, Cyberstarts is, well, just getting started. The firm has previously said that annual returns from its first fund far exceed 100%. This year cybersecurity M&A has also been active—and Cyberstarts companies have proven attractive targets. A few examples, coming to well over $1 billion in deal value: Axis Security was acquired by HPE for a reported $500 million; Bionic was bought by CrowdStrike for a reported $350 million, while Noname Security was acquired by Akamai for $450 million. (Wiz, which this summer turned down an acquisition offer from Google, also did its second-ever acquisition, Gem Security, this year. Sources confirmed to Fortune the deal was around $350 million.)
For Raanan, it’s a lot of distance traveled. He grew up in a small town outside Tel Aviv, and he still keeps the original carton box of his very first computer—a Commodore 64—in his office.
"I laid my hand on the keyboard of the Commodore 64, and that’s when it started," he said. "There was no Internet, no connectivity, and I had to travel as a kid with floppy disks to exchange games and other software…It made me want to discover the world."
There’s I think a throughline to Cyberstarts founders. Raanan wants to give them chances for discovery, the opportunity to do things they maybe never would have done otherwise. He wants to “back founders who didn't have a perfect start to their life,” he said. But first, Raanan wants to know who they are. Because startups and cybersecurity are hard, on technical levels, yes, but especially on a human level.
"It’s a very difficult journey, and you’ll face a lot of personal challenges," said Raanan. "The more successful you are, the challenges get bigger, not smaller…I’ve realized that people with proven resiliency have a better likelihood of overcoming those challenges."
See you tomorrow,
Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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