Investment firm Team8 has raised $500 million in new funds, bringing its total assets under management (AUM) to over $1 billion.
The Tel Aviv and New York-based company divides its activities into two separate areas: venture creation and venture capital. The first helps entrepreneurs get new ideas off the ground, while the second helps them grow. Using this model, Team8 has built 20 companies, invested in a further 21 companies, and achieved eight exits (including Dig and Talon, both acquired by Palo Alto for a total amount in excess of $1 billion during 2023).
Traditionally, it has focused on cybersecurity (which it still does) but has recently further expanded into data and AI, and fintech and digital health.
The new money will be divided between three separate funds: Venture-Creation Enterprise ($110 million); Venture-Creation Digital Health ($70 million); and Venture Capital ($235 million). The final $85 million, says Team8, is for “doubling down on Team8’s most successful companies on an ongoing basis.”
Team8’s USP is its venture creation model. It actively identifies commercial problems, theorizes on potential solutions, and builds and invests in companies that tackle these problems. In this way, it builds solutions for investment rather than simply waiting for an existing company to ask for funding.
This model of define, refine and build is supported by the Team8 Village, a term used to designate the firm’s global network of partners and its own team of more than 80 ‘company builders’. “Team8 portfolio companies leverage company builders in areas such as strategic business planning, research, go-to-market strategies, product marketing, HR, talent acquisition, finance, and more,” says the firm.
Despite the company’s expansion into new vertical sectors, its focus remains on cybersecurity – and it is noticeable that the new sectors all require deep security knowledge (data and AI are cornerstones of security, while fintech and digital health are, and will likely remain, among the most attacked technologies).
Team8’s historical security strengths and focus are built on the nature of Israel’s society. While all advanced nations have their own intelligence agencies, few come close to Israel’s quantity of new companies with new ideas generated by intelligence agency alumni. The reason is that most agencies recruit and retain their agents. Israel is unique in having a military service requirement from which the brightest minds are automatically siphoned into and trained in specific strengths – including cyber. That military service comes to an end, and highly trained cyber experts are released back into civilian life.
But it is not just a question of cyber knowledge – the nature of Israel’s military cyber intelligence agencies is like a school for entrepreneurs. Liran Grinberg, co-founder and managing partner at Team8, explains this in more detail. “8200 is a special organization with an entrepreneurial culture. Although it’s a military organization which is supposed to be very hard kill [a military term that effectively means ‘destroy the threat, no messing’] it actually encourages an entrepreneurial approach with bold new ideas — and it is failure tolerant. Senior people within the unit may suggest a goal when they don’t know if it is possible. The team attempts to achieve this and often fails — but that’s OK, they tried, and are encouraged to try even if it is impossible.”
Every year, hundreds of these uniquely trained young men and women, trained on cutting edge technology and encouraged to attempt the possibly impossible, are retired from their military service. “You get that magic of an incredible pool of talent ready to disrupt categories in cybersecurity through the creation of startup companies using their own built-in entrepreneurial attitudes.” And the pool refreshes itself every year.
It is maximizing these opportunities that have led to Team8’s unique funding model: understand the current cybersecurity problems, understand what sort of solutions could be developed, match those conditions to this evergreen tool of technical expertise and adventurous attitudes – and then provide the initial funds and expert advice necessary to grow a new company. Team8’s basic philosophy is to grow rather than just feed its portfolio; and then to nurture the grown company toward ultimate profitable exit.
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Source: Original Post
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