It was just a short five years ago that I met Adi Dar at the offices of Elbit Systems, Israel’s largest defense contractor. At the time, Adi was the CEO of Elop, Elbit Systems’ flagship Electro Optics company. Elbit had decided to create a new cybersecurity subsidiary called Cyberbit and appointed Dar as the CEO and co - founder of the new company.
The name Cyberbit was intended to show a connection to then parent company Elbit, but also to emphasize that cyber is a totally new field, focused on the commercial market and less on the defense market where Elbit has earned their fame. Five years later, Cyberbit announced their second round of investment by Charlesbank, which has become the primary shareholder. This announcement provided me with the perfect opportunity to reach out to Adi to discuss the five fascinating years that Cyberbit has experienced as a part of the thrilling journey of the entire cybersecurity industry.
Q: Adi, let’s talk about the Cyberbit journey. How do you see this milestone: the investment and sale of controlling interest?
Adi Dar: Recently, as a strategic decision, Cyberbit has chosen to focus solely on the emerging category of Cyber Ranges, next-gen cybersecurity training platforms. In recent years we have seen a growing trend towards investing in the human element in cybersecurity. As a result, we have seen explosive growth in activity in those areas. Essentially, customers were looking for a new training platform that would allow people in cyber to experience cyberattacks in a virtual network that mimics the networks you would find in the real-world.
When we combined these two insights: on the one hand - great market demand, and on the other- a clear operational need, because people have nowhere to train, we concluded that we need to focus our efforts on this area. Recently, we have seen fantastic growth in this category all over the world. Our customers have a dire need to train their teams and are willing not only to invest capital, but also provide the focus and the organizational efforts in providing their cybersecurity teams with targeted exercises against complex, simulated attacks, allowing them to have the opportunity to access advanced training on the same security tools they work with daily.
To maximize our impact we believed that we had to add a new partner to Cyberbit. So, at the end of 2019, we decided to initiate another round of funding (Claridge Israel invested $30 million into Cyberbit in May 2018 as their first external investor. Claridge Israel is a partnership between Claridge Inc., the Stephen Bronfman Family Office, and CDPQ, one of Canada’s largest institutional investors.).
The new investment group is Charlesbank, who invested a very respectable amount, split into two: one investment of $22 Million into Cyberbit to finance the company’s growth plus a second investment of $48 Million in exchange for a portion of Elbit’s shares in Cyberbit. Thus, we enabled a secondary purchase in which Elbit sold a portion of their shares to support this strategy.”
Q: Looking back five years, do you feel the investment is in line with expectations?
Adi Dar: “We’ve learnt a lot over the last five years. We’ve learnt to focus our efforts on Cyberbit Range. We’ve been early to the cyber range market with limited competition, which allowed us to build our positioning as the global Cyber Range market leaders and we need to continue to lead the market, building new technology, define the market rules and stay ahead of the game.
The last five years were highly educating. We’ve become a more mature organization, with more focus andgreater understanding of customer needs. Our executive team is top-notch and our sales team continues to impress with their performance. Today we have more than 50 salespeople around the globe. From the very beginning we chose a slightly different sales strategy - a global sales strategy, focusing on three primary target markets: the US, Europe, and Asia.
We invest in each one of these three markets and aim to be a global company. This gives us an advantage over our competition but also adds complexities. I think that especially today, during COVID-19, when each market is dealing with a different stage of the pandemic, this diversity gives us an advantage. In the last five years we’ve managed to build everything here from scratch. We took the original Range technology platform, packaged and turned it into a commercially viable and scalable product. We had to learn the market and build our sales infrastructure. Looking back, I don’t think we did a bad job at all.”
Q: Where do you see the company in another five years?
Adi Dar: “I think the company is in a good market. Some will say the market is in its early stages (factually, it is the beginning) but we believe this market has the potential to grow at a dizzying pace. The cybersecurity industry realizes it is time to focus on SOC team members, time to invest in our human capital. Companies need to focus on that and Cyberbit is at the forefront of this effort. We lead at a technological level and bring a unique understanding of the operational needs, processes, what to do and where to take it, putting us in a very strong position to continue and lead this market.
This privilege comes with a lot of responsibility. As the company that is building the market, we can take it in a lot of different directions which gives us many advantages. Whoever paves the way and leads the race, if done right, is going to be in a great place. If we look a few years ahead, I expect that we will continue to be a powerful and strong market leader. We need to continue to build the market with our main priority being market education. To accomplish this mission, we need resources, which is what makes the recent investment from Charlesbank so important. Now, the sky is the limit.”
Q: Geographically, which region is rising in terms of the market and which is falling into decline?
Adi Dar: “There is a clear distinction which must be made: the market prior to COVID-19 and the market in general. We tend to see a lot of power in the market both in the US and in Asia. The US market is more mature and therefore easier to grow. The Asian market is hungrier and provides rapid growth.
After the US and Asia there are other markets with advanced cyber capabilities such as Canada, Germany, UK as well, Italy and Spain. However, countries that stand on mature ground right now did not get there from day one. In countries with less advanced cyber infrastructures we carry even more of a responsibility to provide the platform that will enable the necessary construction of appropriate infrastructure, building their cyber ecosystem.”
Adi Dar agreed with me. The next five years will certainly be thrilling and full of surprises.