Zscaler, a prominent American cybersecurity firm, finalized its acquisition of Israeli startup Avalor for a sum of $350 million. This marks Zscaler's third acquisition in Israel, following its purchase of Canonic for approximately $50 million in February of the preceding year and Trustdome for $40 million in April 2021.
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Currently boasting a market capitalization of about $30 billion, Zscaler employs approximately 7,000 individuals and enjoys annual revenues nearing $2 billion. The initial discussions between Zscaler and Avalor were disclosed by Calcalist two months before the acquisition.
Avalor emerged from stealth mode last April after securing a $25 million Series A funding round led by TCV, with contributions from Salesforce Ventures. This funding round was preceded by a $5 million Seed round spearheaded by Cyberstarts, alongside participation from Jibe Ventures and various industry angels.
Based in Ramat Gan, Avalor, comprising approximately 80 employees, was co-founded by Raanan Raz and Kfir Tishbi. Before Avalor, Raz spearheaded engineering efforts at Dataroma, instrumental in constructing the data platform later integrated into Salesforce Marketing Cloud Intelligence, a move that led to Salesforce's acquisition of Dataroma for $820 million in 2018. Tishbi, with a background in crafting high-performance computing solutions at CitiBank, played a pivotal role as a founding member of the AI lab at Playtika. Subsequently, he joined Datorama, overseeing significant big data initiatives.
Following the acquisition, Avalor will function as an independent entity within Zscaler, dedicating efforts to advance its data solutions to bolster Zscaler's cloud security platform, Zero Trust Exchange. The aim is to empower the platform to efficiently handle vast data volumes and furnish insights into emerging threats. As part of the integration, Avalor anticipates hiring numerous new staff members.
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Avalor CEO Raanan Raz (left) and Cyberstarts General Partner Lior Simon
(Photo:Ben Kfir)
Investors, particularly Cyberstarts, are poised to reap substantial returns, potentially exceeding 10x on their initial investment in Avalor.
Avalor's Data Fabric for Security performs the critical task of ingesting, normalizing, and harmonizing data across enterprise security and business systems. This capability facilitates the delivery of actionable insights, analytics, and operational efficiencies. By integrating Avalor's security-centric data fabric into Zscaler's Zero Trust Exchange platform, enterprises stand to substantially enhance and fully automate AI-driven analytics and decision-making in real-time, without the complexities associated with data aggregation and collection.
Calcalist spoke with Raanan Raz, CEO of Avalor, and Lior Simon, General Partner at Cyberstarts, regarding the company’s sale. "We didn't have to sell the company. On the contrary, we met all our business goals and we could have completed another significant fundraising round, but the synergy with Zscaler was very strong," says Raz. "We are data people from Datorama (which was sold to Salesforce) but we met Lior Simon and she identified our cyber potential.
"After a few months we were approached by the CTO of Zscaler who knew me from Salesforce where he was my boss and understood that what we were building was exactly the technology they needed to realize the company's goal. They made several proposals which we turned down until ultimately an agreement was reached. This is Zscaler’s biggest ever acquisition."
Lior Simon, General Partner at Cyberstarts, commented, "This is not a bad return at all. I met Raanan and Kafir at a very early stage, and thanks to their strong background, a significant company was quickly formed."
“AI is only as good as the underlying data, and many solutions lack the additional context and knowledge from data sources across the enterprise to truly leverage security specific AI models,” said Jay Chaudhry, CEO, Chairman, and Founder of Zscaler. “Zscaler operates the world’s largest security cloud with the most relevant data to train security specific large language models (LLMs) and with the Avalor acquisition, we can more effectively identify vulnerabilities, while predicting and preventing breaches.”