The payoff has been huge. Israeli cybersecurity firms own roughly 10 percent of the worldwide $11.9 billion market today, and the country is home to some 300 cybersecurity companies. In 2016 alone, 83 new cybersecurity start-ups were founded, according to YL Ventures, an investment firm with offices in Silicon Valley and Tel Aviv.
“Israel has always been defense-minded and proactive in their defense,” said Judith Germano, senior fellow at New York University’s Center for Cybersecurity. “Combine that defense mind-set with an entrepreneurial spirit, and within Israel that has helped to create this boon.”
According to YL Ventures data, $560 million was invested in Israeli cybersecurity companies in 2015. In 2016 that number rose to $689 million.
Of course, Israel has a history of cybersecurity success to draw upon. Check Point Software, among the earliest companies to develop firewalls to keep hackers out of computer networks, was founded by three IDF veterans and went public in 1996. CyberArk, whose co-founder and CEO Udi Mokady served in the intelligence unit of the IDF, makes software to identify and then block unauthorized access to privileged parts of an organization’s computer network once hackers have made it inside.
Because the Israeli military tries to predict and plan for how cyberattacks of the future will be carried out, it’s typically the case that those soldiers who receive cybersecurity training are “ahead of the curve with where things are going,” Slobodkin said.
That carries over when IDF veterans found private companies. When CyberArk went public in September 2014, it was already pulling in revenue of more than $100 million. Following the hack of Sony Pictures Entertainment two months later, its share price rose quickly as large organizations recognized the need more than ever to protect their digital assets. By the end of 2015, CyberArk had $161 million in revenue, a 42 percent year-over-year increase, and was worth $1.42 billion.