Israeli automated cybersecurity company Torq has announced the completion of a $70 million series C financing round led by Evolution Equity Partners, with participation from Bessemer Venture Partners, Notable Capital, Greenfield Partners, and Strait Capital. The company did not publish the valuation at which the financing round was completed but estimates are that it was $600 million before money and $650-700 million, after money.
Evolution Equity Partners is managed by Richard Seewald, who founded and led the IPO of anti-virus company AVG more than 20 years ago. Evolution has raised about $2 billion for investment in cybersecurity and AI companies and has invested in nearly 20 Israeli cybersecurity companies including unicorns like Pentera, Snyk, and Aqua Security and last year recorded in an exit in the $550 million sale of Talon Security to Palo Alto Networks. Evolution has invested in previous Torq financing rounds but this is the first time it has led an investment round.
The latest financing round brings the total funds raised by Torq to $192 million including a financing round earlier this year. Estimates are that Torq's annual revenue is about $30-40 million although the company has not confirmed this. However, Torq claims that annual recurring revenue (ARR) could reach $100 million by the end of 2026.
Torq was selected as one of "Globes" 10 most promising startups in 2024. The company was founded six years ago by CEO Ofer Smadari, Leonid Belkin and Eldad Livni, serial entrepreneurs who had previously founded Luminate, which they sold to Symantec for about $250 million. Luminate was a pioneer in enterprise network security in the cloud before Shlomo Kramer founded Cato Networks, which leads in the field.
In 2020 Torq pivoted and changed the focus of its products and businesses, when the company realized the inherent potential of introducing a sort of "autopilot" into cybersecurity control centers of large organizations. Such departments are usually staffed by dozens of analysts who receive all alerts on hacking or possible intrusion into the corporate network, information leakage, user or contractor employee whose identity is suspicious, or information that has been improperly used. These are thousands of alerts every day, many of them pass under the human radar and never receive substantial treatment, while many of them are identified as unnecessary, despite the time and human effort they require in their processing.
Since 2021, Torq has been marketing one of the best-selling cybersecurity systems in the Israeli industry, which allows large organizations such as banks, telecoms and tech firms to make their cybersecurity procedures semi-autonomous. The company's cybersecurity manager defines which programs it wishes to monitor, in what manner and what will be the response to threats involving it in a system that allows the process map to be drawn, reminiscent of user-friendly visual management software such as HubSpot or monday.com. With the push of a button, user can add most of their existing cybersecurity systems - such as Wiz and Checkpoint - and integrate them into Torq's management system, through rapid integration that takes rivals hours and sometimes days to complete. When the cybersecurity threat appears, Torq's autopilot rules out redundant threats while the more serious ones are passed on to a human analyst.
Torq is not alone in this market, which is called Security Operation Center (SOC) and is estimated by Palo Alto Networks as worth over $100 billion. The biggest players have been sold in recent years, which marks out potential for a big exit for the Israeli company. Most recently Splunk was sold to Cisco for $28 billion, while Israel's Demisto was acquired by Palo Alto Networks for a more modest $560 million and Siemplify to Google for $500 million. Torq says most of its new customers come to its from existing companies, most of them customers of Palo Alto Networks.
Torq is now taking AI to a new level. The company has developed an engine that allows it to set up a cybersecurity monitoring system using only verbal commands, and allows the administrator more degrees of freedom, and to carry out some of the discovery process automatically or with the help of an expert. Such a cybersecurity analyst can cost the organization between $150,000 and $300,000, and incur heavy data security expenses that Torq insists can be saved. Its system will not make analysts' work completely redundant, but will allow them to concentrate on the important events and will leave most of the unimportant alerts under the radar. "We are the player in the market that is closest to an automated SOC," says Smadari.
Among Torq's veteran customers are Lemonade, Check Point, Blackstone, Aramis, Wiz, SentinelOne, Novobank and Rivian. This year the company has signed up new customers including Zara, Telefonica, and Zoom Info. Torq has 180 employees in its offices in Menachem Begin Road in Tel Aviv and the US and the company plans to hire 130 more employees.
Smadari says, "We have received several acquisition offers, but we are not looking to be acquired. We did it once. If an offer comes, we have a duty to the shareholders and employees to consider it, but we are not looking for it at the moment. The market is calling to us and there is a great demand for products in the field. We have invested a lot in AI and today half of our engineering resources go there."
Published by Globes, Israel business news - en.globes.co.il - on September 24, 2024.
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