Cyera’s $800 Million Haul Shows Cyber Fever Hasn’t Broken

Last week my colleagues Jemima and Valida scooped that Cyera, a five-year-old cloud security startup, was mulling a new fundraise at an eye-popping $20 billion valuation, up from $12 billion in June.

Since then, those talks have gotten more serious, I’ve learned. Cyera is indeed planning to raise around $800 million in a round led by Cyberstarts, which wrote the startup’s first seed check in 2021, according to two people with knowledge of the deal.

The funding will value Cyera at $20 billion and is expected to close in the coming weeks, the people said, making Cyera one of the most valuable private cybersecurity companies in the world. Cyera sells software that scans customers’ cloud storage, databases and email systems to identify and track sensitive data and automatically flag potential gaps in security. It’s not clear if the valuation includes the new money.

The deal talks follow surging revenue at the startup over the past year. Its annual recurring revenue is now in the hundreds of millions, one of the people said. A Cyera spokesperson did not respond to a request for comment.

The new round shows how highly investors are valuing cybersecurity startups that defend against AI-powered threats. Such startups have also been the target of acquisitions. Late Wednesday, Valida reported Palo Alto Networks has considered a $500 million acquisition of Clutch Security, which develops software that helps companies track passwords and authentication codes used by AI agents. Workday, Okta and Crowdstrike have also acquired startups that manage AI agents’ identities in recent months.

Cyera’s new round would be a rare later-stage investment by Cyberstarts, the Israel-based venture capital fund led by Gili Raanan that primarily invests in early-stage companies. Cyberstarts has notched a series of notable returns in recent years. The most significant was Google’s $34 billion March acquisition of Wiz, which Cyberstarts had invested at the seed stage years earlier.

When Cyberstarts wrote Cyera’s seed check five years ago, it was for $4.2 million at a $15 million valuation. The firm has also participated in subsequent Cyera rounds.

Cyberstarts has helped Cyera in other ways. It played a key role orchestrating Cyera’s $1 billion acquisition earlier this year of the identity security firm Oasis, another Cyberstarts portfolio company, according to one of the people. Cyberstarts managing director Lior Simon sits on the boards of both companies.

The white-hot interest in cybersecurity firms shouldn’t come as a surprise to anyone who has been reading the news lately. Ever since Anthropic unveiled its Mythos model this spring, cybersecurity experts have warned that AI would aid hackers’ ability to find new weaknesses in corporate defenses and supercharge the number of public hacks.

In recent weeks, those warnings have come to bear, as a string of high-profile vulnerabilities and cyberattacks aided by AI have left companies scrambling. And more than half a dozen cybersecurity executives told me last month that they’re planning to spend more than ever on security software, including a growing list of tools they say are necessary to address AI threats.

For that reason alone, we’re likely to see an increase in the pace of cybersecurity deals in the months ahead, both as large incumbents consolidate dominant firms and as younger startups raise large rounds on the back of revenue growth from surging demand.

Today on TITV

Check out today's episode of TITV in which Akash Pasricha speaks with Aaron Holmes about his reporting on Microsoft’s data centre buildout and DigitalOcean CEO Paddy Srinivasan about its neocloud differentiation strategy.