Zscaler acquiring cyber startup Avalor for $350 million

American cybersecurity giant Zscaler is acquiring Israeli startup Avalor for $350 million. This is Zscaler’s third acquisition in Israel, following the purchase of Canonic for about $50 million in February of last year and that of Trustdome for $40 million in April 2021. Zscaler currently has a market cap of around $30 billion, employing about 7,000 people, with annual revenues of approximately $2 billion. The negotiations between Zscaler and Avalor were first revealed by Calcalist two months ago.

Avalor came out of stealth last April, raising a $25 million Series A round led by TCV with participation from Salesforce Ventures. The Series A came on the back of a $5 million Seed round led by Cyberstarts with participation from Jibe Ventures and industry angels.

The company, which employs around 80 people and is headquartered in Ramat Gan, was co-founded by Raanan Raz and Kfir Tishbi. Prior to Avalor, Raz led the engineering at Dataroma, building the data platform of what became the Salesforce Marketing Cloud Intelligence platform. Dataroma was acquired by Salesforce for $820 million in 2018. Tishbi, built high performance computing solutions at CitiBank, was a founding member of the AI lab at Playtika, and later joined Datorama to oversee all big data initiatives.

Avalor will operate as an independent unit within Zscaler and continue the development of its data solutions to enhance Zscaler’s cloud security platform, Zero Trust Exchange, enabling it to process large volumes of data and provide insights into threats. Upon completion of the acquisition, Avalor is expected to hire dozens of additional employees.

The company’s investors, especially Cyberstarts, are expected to see a return of 10x or more on their investment in the company.

Avalor’s Data Fabric for Security ingests, normalizes, and unifies data across enterprise security and business systems to deliver actionable insights, analytics, and operational efficiencies. By expanding Zscaler’s Zero Trust Exchange platform with a security-centric data fabric, Zscaler enables enterprises to significantly enhance and fully automate AI-driven analytics and decision-making in real-time without the complexity of data aggregation and collection.

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משמאל מייסד משותף ו מנכ"ל אבאלור אוואלור AVALOR רענן רז וליאור סיימון שותפה ב Cyberstarts שהשקיעה בחברה

Avalor CEO Raanan Raz (left) and Cyberstarts General Partner Lior Simon.

(Photo:Ben Kfir)

Calcalist spoke with Raanan Raz, CEO of Avalor, and Lior Simon, General Partner at Cyberstarts, regarding the company’s sale. “We didn’t have to sell the company. On the contrary, we met all our business goals and we could have completed another significant fundraising round, but the synergy with Zscaler was very strong,” says Raz. “We are data people from Datorama (which was sold to Salesforce) but we met Lior Simon and she identified our cyber potential.

“After a few months we were approached by the CTO of Zscaler who knew me from Salesforce where he was my boss and understood that what we were building was exactly the technology they needed to realize the company’s goal. They made several proposals which we turned down until ultimately an agreement was reached. This is Zscaler’s biggest ever acquisition.”

Lior Simon, General Partner at Cyberstarts, commented, “This is not a bad return at all. I met Raanan and Kafir at a very early stage, and thanks to their strong background, a significant company was quickly formed.”

“AI is only as good as the underlying data, and many solutions lack the additional context and knowledge from data sources across the enterprise to truly leverage security specific AI models,” said Jay Chaudhry, CEO, Chairman, and Founder of Zscaler. “Zscaler operates the world’s largest security cloud with the most relevant data to train security specific large language models (LLMs) and with the Avalor acquisition, we can more effectively identify vulnerabilities, while predicting and preventing breaches.”

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