Cyber startup Cato Networks is valued at $3 billion after raising $238 million.

Cybersecurity funding and venture capital investment in Israeli startups has dwindled, but that doesn’t mean it has dried up.

Tel Aviv-based Cato Networks raised $238 million led by Lightspeed Venture Partners, and has a valuation of more than $3 billion. The new valuation is an increase from the $2.5 billion the company was valued at after a $200 million round, also led by Lightspeed in 2021.

Other investors in the round included Adams Street Partners, SoftBank Vision Fund 2, Sixty Degree Capital and Singtel Innov8. According to the company, Cato Networks has raised $773 million in funding to date.

Cato Networks offers SASE (secure access service edge) platforms to customers. These platforms allow networks and security tools to be delivered from the cloud to the edge of a company’s network, avoiding potential bottlenecks in the data center.

As more companies move their operations to the cloud and move to edge computing, such security becomes more important. Such platforms are offered by both large companies like Zscaler and Palo Alto Networks and startups like Versa Networks, a Santa Clara, California-based networking and cybersecurity company. Nearly a year ago, Versa completed what it described as a “pre-IPO round” of $120 million.

Funding for Israeli startups

Israeli startups have seen a titanic drop in funding this year. In the second quarter, funding for startups in the country fell 67% year-on-year, from $2.7 billion in the second quarter of last year to less than $900 million in the second quarter of this year.

The catalyst for this drop was cybersecurity funding in Israel in particular. Funding for cybersecurity startups in that country fell 87% in the second quarter.

While funding has fallen almost across the board this year, Israel has its own challenges when it comes to venture capital and the startup ecosystem, as the country is undergoing significant political upheaval that appears to have made investors wary.

Cato’s fundraising is the second largest in the country this year, behind only trading platform eToro, which raised $250 million in March.

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