Cybersecurity Spending , Video

Why Cyber Seed Funding Has Blossomed in the Economic Drought

Yoav Leitersdorf on Why Investors Currently Prefer New Startups to Late-Stage Firms
Yoav Leitersdorf, founder and managing partner, YL Ventures

Seed funding for Israeli cybersecurity startups has blossomed despite the economic downturn, and both deal volume and size have strengthened in 2022 as compared to 2021.

See Also: Webinar | Accelerate your SOC with AI-driven security analytics with Elastic and Google Cloud

The indefinite closing of the initial public offering market in spring 2022 caused late-stage investment to fall off a cliff, and funding for Israeli security startups sank by 64% last year, said YL Ventures founder and Managing Partner Yoav Leitersdorf. But for early-stage cyber vendors where an IPO is at least three to five years away, the rise of cloud and AI-based threats has caused investment to continue unabated (see: How Cybersecurity Startups Can Weather the Economic Storm).

"When you talk about seed stage, you're talking about a much longer time horizon than when you're investing at a later-stage venture," he said. "So, in an economic downturn like what we have right now, seed-stage investors can be more positive about the long-term future and not be so focused on the short term. Seed investors remain active in building tomorrow's big cybersecurity vendors."

In this video interview with Information Security Media Group, Leitersdorf also discusses:

  • The investment opportunity around security for AI and AI for security;
  • Why existing approaches to identity governance are coming up short;
  • Why incumbent data loss prevention vendors are primed for disruption.

Leitersdorf founded YL Ventures in 2007 to help brilliant seed-stage Israeli entrepreneurs transform their ideas into game-changing companies. Under his leadership, YL Ventures has raised over $800M across five funds and expanded into a growing multidisciplinary team of experts supporting the most promising startups at every milestone with tailored value-add initiatives. Over the past decade, YL Ventures has developed a track record of successful, high-profile portfolio company acquisitions by major corporations that include Palo Alto Networks, Microsoft, CA - now Broadcom, and Proofpoint.

About the Author

Michael Novinson

Michael Novinson

Managing Editor, Business, ISMG

Novinson is responsible for covering the vendor and technology landscape. Prior to joining ISMG, he spent four and a half years covering all the major cybersecurity vendors at CRN, with a focus on their programs and offerings for IT service providers. He was recognized for his breaking news coverage of the August 2019 coordinated ransomware attack against local governments in Texas as well as for his continued reporting around the SolarWinds hack in late 2020 and early 2021.

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