CyberArk Launches New $30M Fund To Invest In Startups

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CyberArk has created its own in-house venture capital unit to invest in ‘disruptive’ startups working on cutting-edge security technologies that might be shared one day with channel partners.

CyberArk, the publicly traded privilged access mangement vendor, said its new CyberArk Ventures is a $30 million global investment fund whose money comes entirely from CyberArk’s own operating budget.

CyberArk Ventures will not be a free-standing subsidiary of its parent company, but rather an in-house unit focusing on investing on promising new technologies developed by startups, said Clarence Hinton, chief strategy officer at CyberArk. Hinton will be overseeing the venture unit as part of his overall duties.

CyberArk Ventures announced on Thursday that it has already invested in three Israel-based firms – Dig Security, developer of threat protection solutions for data in the public cloud; Enso Security, developer of application security posture management; and Zero Networks, a provider of identity-based microsegmentation.

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“With those three (investments), we’ve gotten off to a nice start,” said Hinton in an interview with CRN.

Moving forward, the goal is to invest in “disruptive” security technologies that go beyond CyberArk’s current primary focus on identity-security, said Hinton. “The security problem is just so massive,” said Hinton of the numerous areas of security that need addressing industrywide.

Though CyberArk Ventures is funded entirely via the parent corporation’s own money, the new unit will be collaborating closely with well-known investors such as Venrock, YL Ventures, Team8 Capital and Merlin Ventures.

The investors will share information on promising young firms and occasionally make joint investments together in companies, Hinton said.

“As singular cybersecurity investors ourselves, our collaborative relationship with CyberArk comes naturally,” said Ofer Schreiber, a partner at YL Ventures, in astatement. “We both have extensive experience with guiding cybersecurity innovators with go-to-market in their startup journey and helping them grow into tomorrow’s global industry leaders.”

With its early investments in startups, CyberArk is clearly trying to get inside access to promising new technologies down the road. The company said it’s actively looking to invest in “disruptors” who come up with cutting-edge security products.

For CyberArk’s channel partners, Hinton said they could benefit in the long-run from new security products they can offer customers, thus strengthening their channel positions in the market.

Currently, about 30 percent of CyberArk’s business is through direct sales and 70 percent via indirect sales, a spokeswoman said.

In a statement, Udi Mokady, founder, chairman and CEO of CyberArk, said the venture unit’s first three investments represent an “exciting opportunity to support the next wave of cybersecurity innovators and nurture an expanded ecosystem of trail blazers.”

“We’re seeking innovative security start-ups that are solving difficult problems for their customers,” said Mokady, whose company has its main offices in Newton, Mass. and Petach Tikva, Israel.

CyberArk’s announcement about its new venture fund came on a busy day for the company, which announced its first quarter financials on Thursday morning.

For the first quarter, CyberArk’s revenue hit $127.6 million, up 13 percent compared to the first quarter of 2021. Though that figure was below some estimates, CyberArk has still topped consensus revenue estimates in three of its past four quarters.

Wall Street appeared to like what it saw on Thursday morning.

After release of CyberArk’s first quarter numbers, its shares shot up by 15 percent in late morning trading, hovering around $122 a share.