Israeli Cybersecurity Startups: Impact of a Growing Conflict

The deadly Oct. 7th attacks on Israel by Hamas, an Islamist organization which rules the Gaza Strip and has been designated a terrorist organization by the United States, Israel, and other governments, had a profound, immediate impact on the cybersecurity companies that operate in Israel and those outside with strong ties to the country.

As Israel has called up reservists and prepares for war against Hamas, leaders of those companies are struggling with personnel issues, the emotional shock of knowing people directly affected by the attacks —which killed more than 1400 people, mostly civilians — and the daily challenges of keeping a business running.

A Reduction in Manpower

Michael Mumcuoglu, CEO and co-founder at CardinalOps, said the main focus during this "difficult and heartbreaking time" has been on supporting the company's Israeli team and their families, but the company has been fortunate to not have experienced any significant impact on their company's operations.

"For most Israeli-based cybersecurity firms, a reduction in manpower is one of the biggest and most immediate effects of this conflict with many volunteering or being called in for reserve duty," he explains.

Increase in Attacks

Mumcuoglu notes there has already been a notable increase in cyberattacks against companies and organizations based in Israel during this time and he expects this to only worsen.

"These attacks will affect civilians, as well as military and infrastructure targets but Israel's significant cybersecurity intelligence and defense capabilities will continue to play a key role in thwarting these efforts," he says.

Ironscales CEO Eyal Benishti says his company was a target of a phishing attempt that involved hackers posing as allies who expressed sympathy during the conflict, purporting to offer resources that instead contained a malicious link.

Considering the reservists being called up for their service duties, he says it's important that organizations leverage global staff so that businesses can operate at full capacity, especially since cybersecurity is such a critical line of defense for all organizations at this time.

"We just witnessed an unprecedented cyberattack on Jerusalem Post, and the expectation is that things like that are only going to intensify, so organizations, especially news organizations that are responsible for delivering objective and truthful information to the global community, cannot afford to let their guard down," Benishti says.

Remaining Resilient?

Yoav Regev, CEO at Sentra, says over the next few weeks to months, companies will need to work a bit differently to support their customers, as the bandwidth and resources of businesses based in, or with a presence in, Israel are almost guaranteed to change.

"Having said that, Israeli companies are obviously built by Israelis who are resilient to the core and extremely agile in adapting to new realities," Regev says. "I expect businesses to quickly find a way to continue to innovate and support their customers while going through one of the hardest moments in the country."

He explains the Israeli military and cybersecurity companies are like a "Gordian knot", intrinsically intertwined — Israeli defense has a longstanding tradition of leveraging technology as its competitive advantage.

"Ask any citizen in Israel what the country's top priority is and they'll tell you it's national security," he says. "The idea of protection and sacrifice is ingrained in our culture and has left a lasting impression on the cybersecurity industry. In my opinion, the two can never be separated."

Sharon Seemann, partner and head of marketing at YL Ventures, an early-stage, cybersecurity-focused venture capital firm headquartered in Tel Aviv, notes business continuity is a crucial element of a startup’s relationship with its customers.

"A prolonged conflict, which we hope to avoid, will necessitate a new normal for all Israelis, startups included," she says. "We have no doubt that Israel will continue to be the global leader in cybersecurity after this crisis and our founders are extremely cognizant of the importance of retaining their customer relationships."

Helping Hands

Seemann says there has been technological innovation geared towards aiding relief efforts and protecting against cyberattacks in this conflict from our own network and founders, as well as other significant fundraising activities for displaced civilians. She points out members of Israel's tech community have built databases and websites for aid coordination, location and relief for displaced civilians, applications for first responders, and many other solutions that are making a tremendous difference in these difficult times. 

Benishti echoed the sentiments of Seemann, Regev, and Mumcuoglu by stating the primary concern is the safety, well-being, and protection of employees and their families, as well as the company's customers, partners and other stakeholders.

"We are giving them as much time they need to stay and feel safe all while ensuring coverage and maintaining our business operations so that our customers can stay protected from malicious actors," he says.

He adds the company is staying in daily communication with its teams and supporting them in the best way possible. "This conflict affects us all, either directly or indirectly."