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As cybersecurity becomes perhaps the number one concern of IT departments in both government and the private sector, cybersecurity startups in one country are deriving a huge benefit from this trend. This country is Israel. For a variety of reasons - primarily (although not entirely) related to the strong focus of the nation's military on cybersecurity - Israeli startups in this space have been garnering lots of attention and some huge investments. A couple of recent events are worth highlighting:

IBM Purchases Trusteer for $800 Million - $1 Billion  

Trusteer focuses heavily (although not entirely) on cybersecurity for banks. Founded by Israeli entrepreneur Mickey Boodaei in 2006, the company has grown rapidly as financial as cybercriminals have increasingly targeted major banks and financial institutions. The company was founded based on the belief that cybercriminals frequently operated by taking over the computers of end-users, and then using these to carry out online banking transactions by taking over bank accounts. Trusteer focuses on enterprise endpoint defenses, and it's technology can identify advanced malware threats that traditional security software can miss. The company has over 400 customers globally, and notes that 7/10 of the Top US Banks and 9/10 UK Banks are customers. 

One amazing thing about Trusteer is that it took in only $10.1 million of outside capital, which is very little outside relative to the amount it was purchased for. One of the big winners on the VC side from this deal is US Venture Partners (USVP), which lead a $6.1 million Series B in back in 2008. Unlike many consumer startups, however, beyond it's initial funding, Trusteer grew and sustained itself through sales.  Fortune had a recent article where it published an interview with Steve Krausz of USVP where he discussed his firm's investment in Trusteer from 2008.  Trusteer is the 12th Israeli startup acquired by IBM, and IBM will open a 200 person R&D cybersecurity team in Israel piggybacking off it's acquisition of Trusteer. IBM now operates five R&D facilities in Israel which employ over 1,000 people.

GE Joins Israeli VC Jerusalem Venture Partners as an Investor in Thetaray

The second win for Israeli cybersecurity startups is GE's investment in ThetaRay. Although terms were not disclosed, the very fact that a company like GE would invest in an Israeli cybersecurity startup is a big win for the sector. ThetaRay focuses on defense against Advanced Persistent Threats, with a particular focus on defending against zero-day exploits. A zero-day vulnerability is a hole in the software that the organization is not even aware of, and hackers then attack this hole in security before the organization under attack even has time to patch it. ThetaRay's other major investor, Jerusalem Venture Partners (JVP), is one of Israel's largest VC's with over $900 million raised to date. JVP possesses a particularly strong expertise in cybersecurity startups, and recently opened Israel's first cybersecurity incubator to capitalize on the country's strength in this sector. Here is a summary of GE's investment in ThetaRay from JVP's website.

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