Zohar Rozenberg (Col. Ret.) is VP, Cyber Investments at Elron Electronic Industries. Zohar serves as board member of several companies and a member at R.D.C’s commercialization arm, in a full partnership with Elron Electronic Industries (TASE: ELRN).

Zohar retired as colonel from IDF’s prestigious 8200 unit after 20 years of service. During his tenure in the service, he led high-risk, high-innovation organizations and projects. Zohar has vast experience cultivating new technological initiatives and leading highly skilled personnel. He was also involved in founding the National cyber bureau and the formation of the Israeli national cyber strategy.

Among other achievements, Zohar was responsible for developing nationwide cyber education programs and working with the Israeli office of education and philanthropy organizations to position Israel as a global leader in cyber technology. Zohar holds a B.S. in electrical engineering and an M.B.A. from Tel Aviv University. He is also a recipient of Israeli highest defense award 2008.

He brings his extensive background in investing in cyber innovations to this discussion on the role technology will play in cyber security.

Christopher P. Skroupa: Tell us about Elron and the work you do in seeding Israeli innovation.

Zohar Rozenberg: Elron is a leading early-stage investor committed to turning promising ideas into global industry leaders, with a proven track record of investments and successful M&As worldwide. Since its establishment in 1962, Elron stands on the forefront of Israeli innovation both as founders and early investors in companies across various industries such as Elbit, Medingo, Given Imaging, Cloudyn and Cyber Secdo.

I joined Elron 3 years ago after serving over 20 years in military intelligence.  During my time, I was a pioneer in the cyber domain and reached the position as head of the cyber department in the Israeli defense forces. I was also involved in various cyber initiatives on the Israeli national level as well as international joint programs in cyber.

With over 25 years of experience in Cyber, I am currently leading Elron’s cyber security investment portfolio while also contributing to several acceleration programs in Israel. Over the last 3 years we have invested in 8 cyber security companies in different areas of cyber security such as enterprise network security, cloud security, mobile authentication, threat intelligence, medical devices security, and even maritime navigation systems security. We mainly invest in seed, round A and follow up investments, joining innovative entrepreneurs whose groundbreaking ideas and cutting-edge technologies are changing the lives and industries in which they operate.

Skroupa: How has Israel transformed into a global innovation center for cyber security?

Rozenberg: The origins and roots of Israeli cyber practices are born out of the Israeli Defense Forces. The field began to develop in Israel in the mid 1990s and since then has grown exponentially.

The mandatory service system in Israel enabled the elite of the Israeli youth to join cyber forces (within the Defense forces) and 3-5 years later bring them out to the industry; hence constructing layers of cyber experts in the local high tech industry. This along with Israel’s entrepreneurial spirit has given rise to hundreds of cyber security companies. Somewhere along the way, the Israeli Government declared cyber security as a national mission and stated a vision for Israel to be one of the top 5 leaders in cyber security globally.

The powerful eco system of cyber experts from the IDF, along with governmental entities enabled Israel’s security innovation to progress at an extremely fast pace. Overall, Israel’s special security needs along with a spirit and tradition of building startups and setting national goals has propelled Israel to become a global innovation center for cyber security.

Skroupa: Can you share one or two companies in your portfolio that you think are addressing emerging cyber challenges?

Rozenberg: As I mentioned earlier, we try to help develop cyber security for new needs and future frontiers, so our portfolio is constructed of many such companies. To name a couple, Alcide and Kzen.

Alcide is a startup developing a unique security platform for modern age data centers being built on hybrid cloud architecture. It is a multi-platform, multi-cloud security solution that brings simple and consolidated cloud ops. Protection.

While new software is being written more and more as cloud native, the world of applications and system continues to undergo tremendous changes. Software is being broken into small elements called workloads, designed to execute over any present and future cloud environment. Legacy systems are still a significant portion of the production environment but that too is already running on different platforms from good old plain servers, to virtualized environments to hosted farms etc. The modern data center is a disperse array of workloads running on different platforms in different locations of different infrastructure providers. But the business process which flows through the data center shouldn’t and doesn’t care about all this complexity. Protecting this complicated data center is becoming an almost impossible task because of the multi-environment nature of it.

This is where Alcide comes in. Alcide developed a platform suitable for any execution environment and any infrastructure while providing workload level security, be it an old-style application, a virtual machine, a container or even serverless functions. It is a single platform that enables managing data center security over multiple environments.

The second company, Kzen, is approaching the evolving space of digital assets. In the past few years we’ve witnessed the rise of cryptocurrencies. While recently, the rates have gone down, there is little doubt that in the future some sort of cryptocurrencies will be in substantial use as some nations are already issuing their own cryptocurrencies. But cryptocurrency isn’t the only form of digital assets. Different tokens already exist, representing real estate, works of art, etc. In the near future other forms of ownership are likely to be transferred to digital assets. Things like a certificate of education or of home ownership. So, if we are going to deal with digital assets, we are going to need a place to hold them safely and securely. Crypto wallets have been around for a few years and thus far, have proven to be both insecure and unfriendly.  For digital assets to become a norm there is a need for a much better way of holding them and that is what KZEN is developing; a new type of a digital asset wallet both highly secure and easy to use, providing services like online support and even insurance for those digital assets. I believe both these companies represent solutions for future needs that apply for a very large target audience.

Skroupa: In terms of your investment strategy, what do you believe is on the horizon for cyber security and innovators creating solutions for those challenges?

Rozenberg: All forecasts predict the continuous growth of the market for cyber security; numbers range between $200B to $230B by 2023/4 with a CAGR of 8-10%. These numbers are not surprising because of two major factors: the first is due to the constantly changing and evolving threat landscape. For example, in 2016 ransomware was the most dangerous and also the most widespread threat in cyber\. However, in 2018 the threat nearly disappeared and was replaced by cryptominers. The second factor is that large portions of the businesses worldwide barely began to deal with cyber security. Asia and also parts of Europe are still in their first stages of building cyber defenses.  SMBs worldwide are only beginning to be aware of their need to invest in cyber security; there is still a lot of unfulfilled market potential out there.

The ever-changing threat landscape also requires continuous and ongoing innovation. Fighting ransomware is not exactly the same as fighting cryptominers. New technologies like IoT or cloud native carry new attack surface and new vulnerabilities which will be exploited by hackers and cyber criminals. The need for new solutions is not going away. Additionally, there is a lot of money for venture funding worldwide. I believe we will continue to see innovation in cyber security, new solutions being created for new problems and threats appearing. I think there are still years for the cyber security market to continue innovating and growing.