Nearly 24 years ago, Vertex Ventures held a first meeting with the founders of cybersecurity company CyberArk, then a new startup. They were persuaded to invest in the company, and stayed with it for more than a decade, which is a long time for a venture capital investment. This week, they saw from afar how CyberArk was sold for $25 billion to Palo Alto Networks. "We invested in them at a valuation of $22-24 million; at the selling price now it’s worth a thousand times more than it was then," says Yoram Oron, founder and general partner at Vertex, with a smile.
Talking to "Globes," Oron recalls his first acquaintance with CyberArk’s founders, Udi Mokady (now executive chairperson of the company) and Alon Cohen (who left it before its IPO), tries to explain the company’s success, and gives his views on what the venture capital scene will look like after the upsets of recent years.
"I first met the CyberArk team a month after the September 11 attacks of 2001. The atmosphere in the investment world and the mood were rock bottom. Nevertheless, we decided to send a very talented analyst called Elisheva Yakobovich to Boston, in order to understand the company’s activity in more depth."
At that time, says Oron, cybersecurity focused on the perimeter, on the assumption that the risk of the enterprise being hacked came from the outside. "With time, it became clear that a large proportion of the damage was actually caused by internal breaches, by people working within the organization who had broad permissions and access to data," he says.
As an example, Oron gives the Snowden affair (the National Security Agency intelligence contractor Edward Snowden who leaked large quantities of classified documents). "At a CyberArk board meeting, I suggested giving options to Snowden. I thought he had done the work of ten marketing people."
CyberArk identified the need to protect information within the organization, and the approach was identity management as a main security tool. "CyberArk said to us ‘We’ll create enterprise safes.’ If you’re in the organization, that’s not enough. You have to get into the organization’s safe to reach the information, and only some of the people will have access to it," Oron says. "The team, Alon and Udi, explained the concept to us very clearly, and we were charmed by them."
"It wasn’t simple, but they persisted"
CyberArk was floated on Nasdaq in September 2014 at a valuation of $473 million and a share price of $16. Before the flotation, Vertex held 11.6% of CyberArk. It parted with its stake about a year later, when it sold shares in two secondary offerings, one at $51 per share and the other at $61 per share. Altogether, Vertex made a very respectable 25-fold return on its investment in CyberArk.
Did you believe at that time that the company would reach the value that it has?
"No. In the end, no-one knows what will happen in the future. That’s what’s good about good teams: they are distinguished from regular teams by the fact that they can widen their scope on the move, define new goals and uses. There are few founders who are capable of making a pivot along the way, and of bringing in really good people.
"The credit goes to Udi and Alon, who are head and shoulders above the rest. They fought the whole world, even some of the investors, because at first people didn’t understand the concept, and at that stage sales were negligible. People in venture capital firms aren’t always patient. It wasn’t simple, but they persisted."
How do you explain the success of a company like CyberArk? What characterizes a successful company?
"I don’t like generalizations, but in general there’s a mix here of talented people who work in solidarity and are set on the goal. These are very important attributes in the technology world. Success is also of course connected to the ability to spot trends. Identifying trends in technology two or three years before everyone else - that’s the name of the game."
From Waze to SolarEdge to CyberArk
Vertex is one of the oldest venture capital firms in Israel; it currently manages $1.6 billion in assets. It was founded in 1997, as part of the Yozma government program for encouraging venture capital investment in Israel. It went on to invest in more than 150 companies, and made 47 exits. Among its best known exits, apart from CyberArk, were Waze, which was sold to Google in 2013, SolarEdge, which was floated on Nasdaq, Actimize, which was sold to Nice, Argus, which was sold to Continental, and Own, which was sold to Salesforce last year.
Before founding Vertex, Oron was CEO of Reshef Technologies, now a subsidiary of Aryt Industries, a manufacturer of detonators traded on the Tel Aviv Stock Exchange at a market cap of NIS 3.3 billion after rising 264% so far this year. "It took that idea thirty years to make the breakthrough," he says. Oron sold Reshef to Aryt and remained as CEO of Aryt for a period. He says that he still has "a warm corner in my heart for that story."
CyberArk also has a warm spot in Oron’s heart. Asked whether he followed the company after Venrtex exited from it, he responds, "All the time. We even invited CyberArk’s management to our investor meetings every year, for them to present their point of view."
How did that help?
"Most of our investors are from Japan, Singapore, and other places, in other words, foreign investors. There’s always a difficulty in convincing investors that there’s a genuine scene here capable of overcoming internal political crises and wars, which are liable to influence their judgment. So when I bring along success stories, as in the case of CyberArk, and show them to the investors, they continue with us. It has helped us, and them as well."
"The State of Israel is a different sector"
The Palo Alto-CyberArk deal is second to the Google-Wiz deal signed four months ago, in which Israeli company Wiz was sold to the technology giant for $32 billion.
In your view, what differentiates the Israeli cyber industry?
"It really is a different sector. Israel, for all kinds of reasons that everyone understands, leads in several different categories in cybersecurity. 40% of the deals here are in cyber, which on a global scale makes us one of the three largest markets in the Western world. I believe that there will be more exits."
How does the Israeli venture capital market look after all the upsets of the past few years?
"There’s an anomaly here that’s hard to explain. In the first half of this year, investment here totaled $7.5 billion, more than in the whole of last year and the year before. The exits are also exceptional in their size is certain areas. Specifically in cybersecurity we receive credit on the country level far in excess of the political approval that we have among customers. There are European countries calling for a boycott of us, and at the same time they buy from us on a large scale, because it’s clear to them that it’s critical for their national security. We have been involved in several significant exits in the past few years, and I don’t think that that is going to subside."
What do you think has to happen in order for there to be more successful companies in Israel, and perhaps more big exits in the future?
"First of all, I would prefer large companies to grow up here that will stay here. Often, after an acquisition, the company relocates, and that of course isn’t so good. You can’t just rely on venture capital firms to finance companies. If at Reshef Technologies the investment amounted in the beginning to $6 million and at CyberArk $20 million, today there are companies raising $60 million at an early stage, because development costs have risen steeply.
"In addition, the talent question is no less important. Specialization has changed in recent years and is more focused on AI, and without education - substantial expansion of academic and research activity - it won’t happen. The private sector can’t deal with these things by itself, especially when foreign investors are fearful, and so the state has to find different ways of acting, such as safety nets and guarantees.
"If I were at the Ministry of Finance today, I would renew the Yozma funds projects. The state put up 40% of Vertex’s first fund, and private investors whom I brought in invested 60%. The Yozma funds are what got the venture capital industry in Israel going."
Published by Globes, Israel business news - en.globes.co.il - on August 3, 2025.
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