In April, Palo Alto Networks acquired Protect AI for $700 million, igniting the market. Since then, U.S.-based Tenable bought Israel’s Apex for $100 million in May, following Cisco’s $500 million purchase of Robust Intelligence a year earlier.
Recent weeks have seen acquisition offers from U.S. cybersecurity giants Zscaler and F5, valued at $45 billion and $17 billion, respectively, landing in Tel Aviv’s tech hub. Israel’s Check Point Software, trading near a $23 billion peak, is also in the race, though its offers, reportedly around $100 million, lag behind Zscaler and F5’s $200–300 million bids.
Varonis, valued at $6 billion, pursued Apex before its sale to Tenable and remains active in seeking AI startups. “The market’s on fire, like a supermarket,” a startup founder told Calcalist.
“Zscaler and F5 approached us. We’re not for sale, but competitors likely will be soon.” Protect AI’s deal has spurred both buyers and investors, with venture capitalists noting startups can choose their investors, funding rounds or buyers.
Top targets include Prompt Security, Lasso, AIM and Pillar. Startups not in ongoing acquisition talks are pursuing hefty funding rounds, with talks for $50–100 million deals underway, despite most being young, founded in 2023 post-generative AI’s rise, employing dozens and earning under $10 million annually.
NOMA and Prompt Security are nearing significant funding closes alongside acquisition interest, though all deny finalized deals.
Buyers prioritize talent over unpolished products, viewing acquisitions as shortcuts to AI expertise. Protect AI, with just $5 million in annual revenue at acquisition, is seen as a talent grab by Palo Alto, which hasn’t marketed its product, unlike its integration of Israel’s Talon post-acquisition.
“It’s easier to buy 30 people for $200 million than hire them to build a solution,” a veteran cybersecurity executive said. Check Point, planning an AI center and 500 hires, seeks similar shortcuts.
The AI cybersecurity market, mirroring past cyber trends but amplified, reached $24 billion in 2024, with research firms forecasting 25% annual growth to $100 billion by 2030.
Israeli startups, often led by IDF intelligence Unit 8200 alumni, dominate, though U.S. competitors are emerging, less affected by reserve duty risks. As the year ends, the race for acquisitions will determine which startups secure a seat in this high-stakes game.
