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INNOVATION BEAT

Boston cybersecurity pioneer wants to back startups

The Cybersecurity Conference forum's scientific program sets out to encourage brainstorming and dialogue aiming to strengthen the fight against cybercrime.Michel Spingler/Associated Press

Tough times have descended on tech startups. With the stock market down and the economy in rough shape, some companies are starting to make cutbacks and layoffs. Investors are also closing the spigots on funding somewhat.

But all those challenges might make it a good time to start a new investment fund. Startups have fewer options to find backing, and investors don’t have to pay the frothy valuations seen in 2020 and 2021.

Enter the new global investment fund from Newton, cybersecurity company CyberArk. The $30 million fund, called CyberArk Ventures, aims to make early-stage investments in young security-tech companies.

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“We didn’t time it for this ... but financially it’s a good time,” said CyberArk cofounder and chief executive Udi Mokady in an interview. “First and foremost, we want to find skilled founders that are solving big, big challenges. History shows that in tougher times, good companies are born.”

CyberArk started out by focusing on a specific challenge in security: keeping hackers from stealing the credentials of IT administrators and other users with deep access to corporate servers and networks. Lately, the company has expanded to protecting the credentials of all kinds of users and even making sure that hackers don’t breach security via connected smart devices.

CyberArk’s researchers are focused on identity security, while Mokady also searches for acquisitions that can expand the company’s offerings with related protection products. The venture fund’s investments, by contrast, aim to “keep us close and connected and supporting things that are, maybe, two steps removed from what we do today,” he said. “It’s a good way for us to keep tabs on what’s sprouting and what is new in the market.”

Corporate venture arms have been on the rise, though they have a mixed record overall. The CyberArk fund’s first three investments, all Israeli startups, demonstrate its strategy: Dig Security protects data being moved among cloud-hosted servers; Zero Networks is trying to create rules to regulate connected devices and prevent hackers from using a breach in one to access others; and Enso Security is focused on keeping hackers from invading applications.

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While Boston is now a global leader in cybersecurity, with Rapid7, Snyk, and Aura, among many others in the ecosystem, CyberArk was one of the area’s pioneering firms. Mokady founded it in 1999 with his friend Alon Cohen, the company’s initial CEO, in Israel but quickly moved its headquarters to the United States to get closer to large corporate customers. It went public in 2014 and today the company counts more than half of the Fortune 500 among its users.

Revenue was up 8 percent last year to $503 million, and up 13 percent to $128 million in the first quarter, the company reported recently. Cybersecurity problems, it seems, are always on an upward trend.

“We are living in very unique times” Mokady said. “We want to make a positive impact.”


Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him on Twitter @ampressman.