Israel is number two in cybersecurity behind the U.S.

With Rosh Hashanah – the Jewish New Year festival – coming next week, it seems like a good time to celebrate the success of the Israeli cybersecurity industry.

Israel is a nation where every citizen faces mandatory military service. Cybersecurity plays an increasingly important role in today’s modern warfare. More and more Israeli military men and women are gaining experience with cybersecurity technology.  This carries over to their post-military careers, and has led to a disproportionately high number of cybersecurity startups compared to other nations.

According to the Jerusalem Post, Israel’s population is 8.4 million. Compared to the U.S. which has a population of more than 320 million according to the latest census figures, Israel is a tiny nation. But when it comes to cybersecurity, Israel is huge. In fact, Israel is the No.2 nation in cybersecurity behind the U.S.

Israeli companies exported some $6 billion in cyber-related products and services last year, a peak figure which surpasses the amount of Israeli defense contracts signed in 2014, according to the Cybersecurity Review, which is published by Delta Business Media in London. 

The latest data from Israel’s National Cyber Bureau (NCB) shows a surge in cyber exports from $3 billion in 2013 to $6 billion last year. According to NCB, that constitutes about 10 percent of the global cyber market.

Israeli exports to the U.S. are key

Globes Online, an Israeli business news media property, reported that figures collected by the Israel Export and International Cooperation Institute show that over 200 cybersecurity companies are operating in Israel in a field that is growing at 8 percent a year. Its main market is the U.S., and most of the technologies exported there are designed to protect government, military, and financial infrastructure, in addition to protection of strategic facilities.

To get some perspective on the Israeli market, listen to what some of the leading VCs who invest in to cybersecurity have to say:

In a recent VentureBeat article, Jerusalem Venture Partners (JVP) stated that the last couple of years have demonstrated that significant public companies are being created in the cyber-security space in Israel, from Imperva to Varonis to the most successful Israeli IPO of 2014 – CyberArk.

Glilot Capital Partners, an Israel-based venture capital fund investing in early-stage cybersecurity and enterprise software start-ups, recently announced the successful closing of a $77 million fund. “The fund places a strong focus on ‘rule-breaking’ companies in the cyber-security and enterprise software spaces, with a lean expense structure and a rapid time-to-market.

“Based on our research, more than 150 cyber security companies were founded in Israel since 2012,” stated Yoav Leitersdorf, Managing Partner at YL Ventures, a San Francisco-based venture capital firm that is focused on cyber security and invests primarily in Israeli companies, in a press release from The California Israel Chamber of Commerce (CICC).

“The increased activity in the M&A of Israeli cyber security companies has shown the technological competitiveness of Israel in the hyper growth security market. We believe this is only the beginning and we will see large substantial cyber security companies emerge out of Israel,” stated Ronen Nir, General Partner at Carmel Ventures, in a press release from CICC.