C2A raises $6.5M for its in-car cybersecurity platform

Cars are now essentially computers on wheels — and like every computer, they are susceptible to attacks. It’s no surprise then that there’s a growing number of startups that are working to protect a car’s internal systems from these hacks, especially given that the market for automotive cybersecurity could be worth over $900 billion by 2026.

One of these companies is Israel’s C2A Security, which offers an end-to-end security platform for vehicles, which today announced that it has raised a $6.5 million Series A funding round.

The round was led by Maniv Mobility, which previously invested in companies like Hailo, drive.ai and Turo, and ICV, which has invested in companies like Freightos and Vayyar. OurCrowd’s Labs/02 also participated in this round.

Like most companies at the Series A stage, C2A plans to use the new funding to grow its team, especially on the R&D side, and help support its customer base. Sadly, C2A does not currently talk about who its customers are.

The promise of C2A is that it offers a full suite of solutions to detect and mitigate attacks. The team behind the company has an impressive security pedigree, with the company’s CMO Nat Meron being an alumn of Israel’s Unit 8200 intelligence unit, for example. C2A founder and CEO Michael Dick previously co-founded NDS, a content security solution, which Cisco acquired for around $5 billion in 2012 (and then recently sold on to Permira, also for $5 billion).

“We are extremely proud to receive the support of such outstanding investors, who will bring tremendous value to the company,” said Dick. “Maniv’s expertise in autotech and strong network across the industry coupled with ICV’s rich experience in cybersecurity brings the perfect combination of skills to the table.”

A look back at the Israeli cyber security industry in

2018 saw a spate of major cyber attacks including the hacks of British Airways, Facebook and Marriott. Despite growing emphasis on and awareness of cyber threats, large organizations continue experiencing massive data breaches. And as the world becomes increasingly connected (cars and medical devices, among others), attack vectors are evolving and exposures multiply.

The Israeli cybersecurity industry has long been recognized as a hotbed for innovative solutions, and 2018 to be yet another strong year. Early stage companies raised more money than ever before to tackle emerging security threats like protecting the proliferating number of internet-connected devices and enabling blockchain technologies to thrive in more secure environments.

Growing seed rounds chasing greenfield opportunities

In 2018, the total amount of funding for Israeli cybersecurity companies across all stages grew 22 percent year-over-year to $1.03B. This closely matched the funding trends of 2016 and 2017 that each saw 23 percent year-over-year growth in funding amount. At the same time, 2018 saw 66 new companies founded, an increase of 10 percent over 2017, which represented a rebound after a dip last year (60 new companies in 2017 vs. 83 in 2016). Notably, average seed round increased to $3.6M in 2018 from $3.3M in 2017. 2018 marked the fifth consecutive year the size of Israeli cyber seed rounds grew. Since 2014, the average seed round size has increased 80 percent.

With industry growth metrics of Israeli cybersecurity up across the board in 2018, 2017’s dip in new cyber startups appears to have been an outlier. Not only does entrepreneurial interest in cyber look to be on the rise, investor enthusiasm, especially at the early stages, signals a market brimming with opportunity. Growing round sizes are interesting, but more revealing is following where this capital is flowing.

Emerging fields supplanting “traditional” technologies

The top emerging fields among new startups in 2018 included new verticals within IoT security, security for blockchain and cryptocurrencies, cloud-native security and SDP (Software Defined Perimeter). These nascent verticals drew considerably more attention than more “traditional” cyber sectors such as network security, email security and endpoint protection. Of all the emerging sectors, IoT drew the most investment with funding reaching $229.5M across all stages. What makes IoT particularly interesting is its continual branching into various new sub-domains including automotive, drones and medical devices.

Shai Morag, CEO and co-founder of Secdo, an Israeli cybersecurity firm acquired for $100M by Palo Alto Networks in mid-2018, sees these trends accelerating. “Innovation is going to keep happening in these areas for the next few years. We’ll also see innovation in third-party supply-chain risk assessment and management. Another wide-open field for innovation is SMBs. They are an underserved market hungry for full-stack solutions. These emerging fields are where I’m seeing the most excitement.”

Breaking out data on seed round funding into cyber startups targeting emerging vs. traditional markets reveals an even more pronounced growth trend. 2018’s aggressive early stage funding rounds disproportionately focused on companies pursuing emerging fields within cybersecurity. Of the 33 seed rounds raised in 2018, 20 (61 percent) went to companies in emerging fields. Even more striking, the sum of all seed rounds for emerging tech companies in 2018 was $79M, a 76 percent year-over-year increase. The numbers are clear, there is overwhelming investor interest in emerging cyber tech.

For example, the two largest seed funding rounds this year were in the IoT security domain. VDOO, founded by ex-Cyvera entrepreneurs (acquired by Palo Alto Networks in 2014 for $200M) and which develops security solutions for IoT vendors, raised an abnormally high seed round of $13M. Toka Cyber has secured $12.5M seed funding from Andreessen Horowitz and others, to develop and expand their IoT cybersecurity platform for governmental agencies. Twistlock, a pioneer developer of cloud-native security solutions raised $33M series C this year. BigID which protects sensitive data in light of GDPR and other privacy regulations raised both A ($14M) and B ($30M) rounds during 2018.

As the more traditional cybersecurity markets continue to consolidate and mature, prospects dim for “me too” cyber startups. We see that the industry still faces pressing problems in need of innovative solutions. Looming labor shortages, GDPR and other global data privacy legislation and the IoT explosion, are major challenges presenting substantial opportunities to incumbents able to provide relief. Investors and entrepreneurs sense greenfield opportunities on the horizon and are racing to plant their flags before the competition. This new divergent ecosystem is more selective of sophisticated, savvy investors and specialized, seasoned entrepreneurs.

Greenfields, not green founders

In 2018, 60 percent of founders had more than a decade’s worth of experience in the private sector–a 28 percent increase from 2017. The experience of these more seasoned founders came mostly from working in startups either as an executive or as an entrepreneur. Although Israel’s cybersecurity ecosystem relies heavily on the technical training potential entrepreneurs receive during service in the Israeli Defense Forces (IDF), in 2018, the proportion of founders coming straight out of the IDF fell to 2 percent, dropping from 10 percent the year before.

While nearly all Israeli founders leverage the skills and know-how acquired in the IDF’s various technological units, the need for experience from the private sector, either as an executive or an employee, seems to be more prevalent. Larger seed checks and larger ambitions are fuelling this push for more mature, veteran founders. Rising founders are not simply looking to build a novel technology and score a lucrative acquihire exit from an existing giant–they want to push into greenfield territory and stake a market-leading claim all their own.

Amichai Shulman, co-founder & former CTO of Imperva and a Venture Advisor at YL Ventures, gives such founders aiming to “own a market” the following advice: “Make sure you’re able to explain – primarily to yourselves – how your offering and product becomes something bigger than what it inherently is in the beginning. Be able to articulate how you expand (in the future) further into organizations, not just by ‘selling more’ but by solving bigger and more general problems.”

Cyber exits continue to overperform

Beyond general trends, 2018 also had many exciting individual exits. Checkpoint-Dome9 and CyberArk-Vaultive were notable because both acquirer and acquiree were Israeli — a mark of true market maturity. The acquisition of Sygnia by Singaporean holding giant Temasek also was remarkable because it shows that the Israeli cyber market continues to attract new classes and kinds of global strategic players each year. In addition, Thoma Bravo’s  $2.1B acquisition of Israeli cyber firm Imperva made waves throughout the industry.

Tsahy Shapsa, co-founder of Cloudlock, which was acquired by Cisco in 2016 for $293M, reflected on the potential he sees coming from growing global investment. “From an entrepreneurial perspective, there is a constant dilemma between short-/mid-term exits and building a legacy company. As funding floods into Israel from around the world, temptation to sell early only increases. But all these exits have an advantage. They grow the pool of experienced, ‘repeat’ entrepreneurs and set the stage for more legacy companies to originate locally.” Zohar Alon, CEO and co-founder of Dome9 Security, which was acquired by Checkpoint in 2018 for $175M added the following guidance: “Israeli entrepreneurs should establish and maintain a constant communication channel with the local corporate development leaders, same as most do with the VC community focusing on product and go-to-market synergies.”

Israeli cybersecurity maintaining momentum

In 2018, investors became more domain-focused and preferred emerging fields. With traditional cybersecurity consolidating, emerging greenfields signal much stronger potential. Furthermore, growth continued both in cybersecurity startups as well as their fundraising across all stages, indicating rising confidence in the Israeli cybersecurity market.

The 2018 Israeli cybersecurity market boasted an excellent exit climate, highlighted not only by Imperva’s large-scale acquisition but also by the diversity in the types of players in the space. As such, the local cybersecurity market signals its ability to create and nurture large-scale security vendors, thereby attracting variety of both international and local players which continue identifying and capitalizing opportunities in this domain. For 2018, as has been the case for many years past, the state of the cyber nation is strong–and 2019 appears to promise more of the same.

Airobotics raises another $30 million for its automated drone technologies

Airobotics, the developer of automated drones that can fly without a pilot, has raised $30 million in a new round of financing.

The new funding will be used to boost the company’s manufacturing efforts to meet new demand and help with the development of the company’s global headquarters in Arizona as it looks to capitalize on interest from mining companies in North and South America.

“Streamlining manufacturing to achieve growth and scale is what this funding is to be used for,” according to the company’s chief executive officer and co-founder Ran Krauss.

As the company looks to increase manufacturing, it will likely confine its efforts to the U.S., given the constraints that the Airobotics has on its potential vendors and supply chain thanks to its involvement in the defense industry.

Krauss would not comment on whether the company is doing any work with the U.S. Department of Homeland Security or the much-maligned Immigrations and Customs Enforcement and U.S. Customs and Border Patrol, but ICE has expressed interest in acquiring drone technologies and the company has been pushing hard into the homeland security market (indeed it was a centerpiece of the company’s last $32.5 million round in 2017).

“We are deepening our work in the mining industry in Australia and in the U.S. [and] the next step is to be active in smart cities,” said Krauss.

The company’s mining operations span the globe with deployments through the mining giant BHP in Arizona, South 32 in Australia, Vale in Brazil and additional work in Chile.

“We are looking very seriously into the United States because of our scale. Mining is a significant market in the U.S. and also… flights in cities which is something we’re looking to in two years,” said Krauss.

Airobotics is also making money from contracts doing security and facilities management for companies like Intel, where it is already deployed in one of the company’s large semiconductor fabrication facilities.

The company was the first company in the world to be granted authorization to fly fully automated drones without a pilot, as licensed by the Civil Aviation Authority of Israel (CAAI).

“We have a strong business pipeline and to keep up with demand for our technology, we are continuing to expand operations across the countries in which we operate, specifically our new headquarters in the U.S,” said Krauss in a statement. “Additionally, the new funding will drive our continuous work with Aviation Authorities to obtain BVLOS (Beyond Visual Line of Sight) Certificate of Waiver in every geography we operate in, including in the U.S.”

The new financing was led by Pavilion Capital, a Sino-U.S. investment firm based in New York. Previous investors including Blue Run Ventures China, Charles River Ventures and OurCrowd, as well as additional private investors, also participated in the funding.

Skyline AI raises $18M Series A for its machine learning-based real estate investment tech

Skyline AI founders Iri Amirav, Or Hiltch, Guy Zipori and Amir Leitersdorf

A mere four months after coming out of stealth mode with $3 million in seed funding, real estate investment startup Skyline AI announced that it has raised an $18 million Series A. The round was led by Sequoia Capital, a returning investor, and TLV Partners, with participation from JLL Spark, a division of real estate investment management firm JLL. The strategic funding will allow Skyline AI to add more asset classes to its platform, which uses data science and machine learning algorithms to help institutional investors make better decisions about properties.

Skyline AI says its technology is trained on what it claims is the most comprehensive data set in the industry, drawing from more than 100 sources, with market information covering the last 50 years. Its technology is meant to provide faster and more accurate analysis than traditional methods, so investors can react more quickly to changes in the real estate market.

Co-founder and CEO Guy Zipori told TechCrunch in an email that the startup decided to raise its Series A so soon after coming out of sleath because of positive response from investors, adding that the round was oversubscribed. “The timing of the round also worked out perfectly with our current deal flow and expansion plans. The round was significant, putting us in a great position to move forward,” he said.

Skyline AI has had a busy few months since emerging from stealth. In June, it teamed up with an unnamed partner in the U.S. to acquire two residential complexes in Philadelphia for $26 million. Zipori said they decided to make an unsolicited offer after Skyline AI’s platforms determined the properties were being mismanaged. Then in July, Skyline AI announced a partnership with Greystone, a real estate lending, investment and advisory firm, to collaborate on improving the dealmaking and loan underwriting processes.

JLL and other strategic investors in Skyline AI’s Series A will allow the startup to add analysis and underwriting for new asset classes, including industrial, retail and office properties, to its platform. “This in turn will enable us to deepen and strengthen cooperation with the leading commercial real estate investment firms across the U.S.,” said Zipori. Some of the capital will also be spent on growing its research and development, data science and AI teams in Tel Aviv, and its recently opened sales and real estate office in New York.

In a press statement, Sequoia Capital partner Haim Sadger said “Over the last few years, we’ve seen AI disrupt a number of traditional industries and the real estate market should be no different. The power of Skyline AI technology to understand vast amounts of data that affect real estate transactions, will unlock billions of dollars in untapped value.”

These are the competitive pressures driving automakers to accelerate new tech adoption

The transformations that companies like Tesla, Uber and Lyft bring to the auto industry are changing more than just the ways car companies think about drivetrains and ownership, and its opening doors for new ways of thinking about the entire mobility industry.

That’s the word from some of Israel’s top investors from the stage at our TechCrunch Tel Aviv event.

Every aspect of the auto industry is being reshaped by technological innovation and it’s opening the traditionally closed supply chains that car makers have relied on for at least a century creating more opportunities for startup vendors in areas like sensors, software, services, and yes, even electrification.

For Michael Granoff, the founder of Maniv Mobility, Chemi Peres, the founder of PItango, and Yahal Zilka, the co-founder of Magma Venture Partners, there are at least four areas of opportunity for startups (especially startups hailing from Israel’s innovation nation) to penetrate the trillion dollar mobility market.

Artificial intelligence, new business models, electrification, and enabling sensor technologies are all areas where Israeli entrepreneurs have launched businesses, and they’re all technologies in high demand from established automakers and the upstarts that would challenge them.

“It’s not just automotive, but what Israel can bring to that,” says Zilka. “The big thing in automotive was the introduction of semiconductors. Over the next 15 to 20 years it’s going to be artificial intelligence.”

How those technologies come to market for mobility used to depend on an established supply chain, where tier 2 technology vendors would sell to tier 1 suppliers and then be integrated into the cars by the big brand original equipment manufacturers like Ford, GM, BMW, Daimler, Toyota, and the like.

Tesla’s entrance into the market and the competitive threats that Uber, Lyft, Gett and others pose to the entire automotive business model have pushed these companies to shake things up, making investments in technology for the automotive industry far more attractive.

“Only when your business is effected by the digital wave of internet and connectivity, only then do you start moving,” says Peres.

For Israel, that means a window has opened for enabling technologies like sensors, artificial intelligence, data processing, and new business models.

These new companies with names like Autofleet, otonomo, Innoviz Technologies, Oryx Vision, and Via are already establishing themselves as competitors or suppliers helping to transform the existing order. 

For Peres and the other investors, automakers should expect to see even more radical changes ahead as technologies push further transformations to industrial infrastructure, the urban environment and consumer demand.

“The old generation was that you create a production facility… [and] you create masses of products, but it’s going to be completely disrupted,” says Peres. “You’re going to have much less cars and cars are going to be much more sophisticated in their services.”

Cars, Peres says, are moving to the elevator pitch — where vehicles on streets are used like elevators in buildings. “It will eliminate ownership, reduce operational costs, reduce energy costs, and will be able to get a great service and save the over 1 million people that are killed every year and the 50 million people that are injured,” Peres says.

Those changes will impact more than just the auto industry. Manufacturing will be disrupted by additive manufacturing technologies, and, eventually, advancements in nanotechnology that will allow for self-assembling machines.

Eventually, these changes are going to force more action from regulators as they grapple with how to address the increasing demand that will come with cost depreciation, according to Granoff. 

“There’s going to be a pricing mechanism that is going to be required to modulate the use of roadways,” he says. 

For Peres, the future may not be the use of roadways at all. “It doesn’t need to be cars on roads. It can be flying robots,” says the Pitango co-founder.

No matter what the ultimate solution is, given the Israeli entrepreneurial ecosystem, it’s a good bet that at some level there’ll be Israeli technology behind the wheel of each innovation.

 

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