Venture capital firm YL Ventures GP Ltd. has closed its fifth fund with $400 million, the largest seed-stage cybersecurity fund ever raised.

The YLV V follows on from YL’s fourth fund of $120 million in July 2019 and will be used to champion Israeli cybersecurity innovation. The fund will bring YL’s total assets under management to $800 million.

The new fund will target a total of 10 seed-stage Israeli cybersecurity startups, at a rate of three startups per year. YL Ventures typically allocates capital within existing funds toward continuous investment in companies’ follow-on rounds, with the fund designed to support growth regardless of market fluctuation.

Why invest exclusively in Israeli seed-stage cybersecurity startups? YL argues, rightly, that Israel is a treasure trove of cybersecurity professionals who fuse deep technology with innovation to develop the most cutting-edge solutions for critical problems. With an increasing demand for such products, the global market is a prime target for Israeli disruption.

The overall funding of Israeli cybersecurity startups in 2021 is said to have reached a record of $8.8 billion with nine new Israeli cyber unicorns, those valued at $1 billion or more — about a third of the total number of new unicorns minted last year globally. YL believes that with capital and accelerated growth, Israeli cyber startups reached this status much faster, cementing the Israeli industry’s position as the “scale-up nation,” and the birthplace of unicorns.

YL Ventures’ funds have a strong track record in picking winners. Its 2017 fund, YLV III, invested more than $130 million in seven portfolio companies. Within only five years since the fund’s launch, it is now one of the top-performing VCs worldwide.

Out 25 investments since the firm’s inception, 11 YL portfolio companies were acquired by leading global enterprises. These include Twistlock Ltd., acquired by Palo Alto Networks Inc. for $410 million; Hexadite Ltd., acquired by Microsoft Corp. for $100 million; Medigate Tech Ltd, acquired by Calorty Ltd.; and BlazeMeter, acquired by CA Technologies. Among YL Ventures’ most successful companies are Axonius Inc., which has raised a total of $395 million and is now valued at $2.6 billion, and Orca Security Ltd., which raised a total of $632 million and is now valued at $1.8 billion.

Photo: YL Ventures