At GGV, we’re delighted to announce today that we’ve formally partnered with VDOO, the leading IoT device security company, leading the company’s $32M Series B financing along with WRVI Capital. The company’s existing investors including 83North and Dell Capital, along with several new strategic investors such as NTT DOCOMO and MS&AD Ventures, also participated in the round. GGV’s investment in VDOO is the culmination of the significant focus we’ve had on the Israeli startup market, representing the first of what we expect to be many new investments out of Israel, adding to investments we’ve made backing Israeli entrepreneurs located in the US such as Houzz and Hippo. Our excitement for VDOO is derived from their incredibly strong founding team, their focus on the IoT security market at the device level, their leading technology and initial strong market momentum.
- Founding Team. Netanel (Nati) Davidi and Uri Alter are the type of incredible founders we love to back at GGV. They built and sold their first company, Cyvera, a next gen endpoint security play, in 2014 to Palo Alto Networks for $200M. All our friends at Palo Alto rave about the work Nati and Uri did post acquisition and the type of people they are. Despite Nati and Uri’s success at Cyvera, they still are passionate about security. They founded VDOO based on the clear opportunity they saw in the market and the team they could assemble to address this market need. They recruited Asaf Karas, a 15 year veteran of the IDF and embedded software reverse engineering expert, to be their co-founder. Asaf is well known for his IDF work in cyber security operations and research, with over 200 cyber researchers reporting to him in his last role. Nati, Uri and Asaf have gone on to build a highly specialized and focused team to address IoT security from the device level, an innovative approach with tremendous potential.
- IoT Device Security Market. The IoT market is exploding. Per Statista, the number of IoT devices will grow to over 30 billion by next year, more than double over the past five years. The growing number of attacks, zero day discoveries and malware crafted specifically for IoT al indicate that cyber criminals are increasingly exploiting IoT devices due to their lack of security. The data bears this out – the number of detected IoT malwares has increased over 1000x in the past five years and number of reported infected IoT devices is now deep into the millions. Device makers, including vendors, manufacturers and large integrators, all are realizing they need to take IoT device security seriously – the risks are grave, customers are becoming more knowledgeable and demanding, and regulation is ramping up. These device makers lack the wherewithal to incorporate well codified and reliable device security practices because the supply chain creating these devices is complex, the firmware is often built by teams without a security expertise or mindset and pressure to get products to market speeds the embedded software release cycles. The team recognized that to secure IoT devices, you need to start with product design, then go through ongoing validation during development, and finally post deployment in real time production. Every device maker with whom the team has spoken so far has validated this market problem and expressed interest in VDOO’s solutions. Hence, VDOO’s pipeline is rapidly expanding.
- Leading Technical Approach. Despite the large and growing market need for IoT device security, this is a very difficult problem to solve. As a result, while some have tackled IoT security, they’ve tended to focus on network-based security for IoT. While important, these approaches do nothing to patch the security exposure that many IoT devices have. VDOO has built totally novel technology that allows the company to deeply analyze the embedded binary code of the devices they secure in an automated fashion, exposing the known vulnerabilities as well as suspected zero-day vulnerabilities, enabling VDOO to provide simple, distilled guidance for device manufacturers to close gaps. Since IoT devices and associated embedded software changes frequently, VDOO provides this security on an ongoing basis. The company also automatically tailors an agent-based runtime solution for any device to protect against zero-days and provide visibility where today there is only darkness. Finally, the company is in early phases of providing a certification to devices that have been appropriately secured, enabling device makers to prove to their customers that precaution has been taken. VDOO has the team and know-how to continue to innovate in this area, keeping them ahead of any future competition for years to come.
- Strong Early Momentum. Every device maker who has met with VDOO has acknowledged understanding the inherent security risks in IoT. These device makers, including several Fortune 500 companies from industries such as smart buildings, medical, industrial, automotive, safety and security, enterprise appliances, telecom and smart home, are all expressing keen interest in VDOO’s solutions. VDOO also has a rapidly growing partner and distribution network, including NTT, Macnica, DNP and Fujisoft in Japan, for example.
GGV has had our biggest successes backing top notch entrepreneurs, going after large and growing markets with unique and novel approaches. We couldn’t be more excited for our VDOO investment in this context!