Cyber Intelligence: Here to stay.
Investing in this new and evolving field should be done by industry experts and not just anyone
In the past few years, the Cyber Intelligence industry has grown and undergone a major process of greater specialization. In 2019, the young industry already represented 7% of Israel’s overall defense exports. Although there has been a lively public discussion about the limits of use of Cyber Intelligence technology, even those who condemn it, realize that we are talking about an important industry that is here to stay.
In my opinion, there should be a discussion on the issue of what is the level of expertise required by the organizations investing in companies in this industry. Because the clear fact is that those investors who will specialize in the field — will harvest the fruits yielded by the companies in the future.
A decade ago, when I Co-founded NSO Group, the task of raising capital for an early stage company was particularly complex. During that period, there were almost no major financial bodies, who knew how to invest or evaluate companies, in the specific niche in which we operated. The story and the promise were and remain excellent — a company that is developing Cyber Intelligence software to assist intelligence and enforcement agencies in combating crime and terror, both at home and abroad. The investors back then struggled to assess the commercial potential, regulation, depth and complexity of the technology, and the associated challenges.
A decade has passed and NSO has become one of the most successful companies in its field — worldwide, and the Cyber Intelligence industry has come a long and significant way. Dozens of new companies have been founded in Israel and around the world and investors of various sizes are active in the sector. Despite this, there is still a gap in the ability of investors to respond to the needs of the companies in the industry and to cope with the growing challenges in the correct way.
I think that the Cyber Intelligence industry fulfills a positive and absolutely necessary function, which unashamedly assists in the war on terror, serious crime, and search and rescue. The rise in accessibility to smartphones and elaborate encryption has created a new reality, in which terror groups and organized crime can communicate in a secure and covert way. This fact has pressed governments to act in innovative way in order to cope with these changes. This is the reason that Cyber Intelligence is more vital than ever and is not about to disappear from our lives.
This complicated reality dictates that the industry will continue to progress and grow. In order to do this successfully, the companies and entrepreneurs engaged in it need experienced and specialist investors representing ‘smart money.’ In other words, those who can assist companies, not only on the financial level but also on the professional and operational and even regulatory level.
Just as there are investment funds specializing in fields of Biotech and Medical Devices, Cyber Security, Medical Cannabis and Fintech — so there is a need for specialization in this field. The understanding of these bodies in the uniqueness of the Cyber Intelligence industry is no less important than the depth of their pockets. Cyber Intelligence companies are working with governments and their conduct with them is of the most complicated kind. They work under the strictest regulation in the industry, and some of them even impose on themselves additional regulations, and they are committed to the highest level of technological performance. I believe that when such investment bodies will be established, they will be able to help these same companies to get through the seed stage and more advanced financing rounds and will even increase their chances of becoming a very large company. In addition, these bodies, can even become a helpful and balancing factor in the charged public debate around the issue.
The number of companies in Israel in particular, and worldwide in general, that are engaged in cyberattack, is significantly smaller than the number of cybersecurity companies. That is to say that all the investment opportunities in Cyber Intelligence are likely to be critical. Therefore, it is better that investment bodies in cyber companies strive to possess high specialization and deep understanding in the field, in order to be able to serve as genuine partners to companies and help them in the anticipated challenges of the future.
The bottom line is that Cyber Intelligence technology represents an integral part of the ability of every country interested in maintaining order and civil security. Therefore, with the growth and maturity of the industry, it would be better if investors would grow and strengthen around it, so as to lead the industry to the future that it deserves.
The author is the Co-founder of NSO Group and Orchestra Group where he serves as CEO.
