The first time Gili Raanan handed Assaf Rappaport a big check, it was at a gas station.
“It was a convenience store inside a gas station, and there weren't really any tables, just two seats where you could sit,” said Raanan, a venture capital investor who was with Sequoia Capital at the time.
The unusual meeting point was a compromise of sorts, halfway between Tel Aviv, where Rappaport lived, and Raanan's home base in the coastal town of Mikmolet, 42 miles north.
“Assaf said, 'I don't have a car.' I live in Tel Aviv, but I have no idea where Mikmolet is,” Raanan recalled. So they struck a deal at a gas station. “We discussed the terms, shook hands, and that's how our first investment in Asaf happened.”
It was in 2012 with a startup called Adallom. The company was owned by Rappaport and its co-founders Ami Luttwak, Yinon Costica, and Roy Reznik, which he eventually sold to Microsoft in 2015 for his $320 million.
And the story moves super fast from there. Now, nearly 12 years after sitting across from Raanan at that gas station, Rappaport is handing out his own checks. However, Rappaport says he is not a VC. He is the CEO of Wiz, a fast-growing cloud security startup that is seeking acquisitions.
In December, Wiz announced its first deal, acquiring developer cloud platform Rafft for a reported $50 million. Now, Wiz is embarking on his second, even larger deal, completing the acquisition of Gem Security, the companies exclusively confirmed. luck. Wiz and Gem declined to disclose financial terms, but sources said: luck That's a $350 million deal.
Founded in 2022, Gem specializes in what is commonly referred to as cloud detection and response (CDR), and came on Rappaport's radar last year. “I've never received so many calls from investors asking, 'How can I get into Gem?'” Rappaport said. “That's when I realized something was going on.”
Rappaport began calling Arie Zilberstein, Gem's CEO and co-founder. But Zylberstein wasn't even considering a deal until recently.
“Honestly, up until a month ago, I wasn't even thinking about acquisitions,” Mr. Silberstein said. However, his CEO of Gem eventually re-emerged considering the benefits of joining forces. From there, the deal moved quickly. “It's not relatively fast, it's amazingly fast,” said Nadav Zafrir, co-founder of Team8 and an investor in his Gem.
The acquisition of Gem, which Bloomberg reported was in the works in March, marks another significant milestone in Wiz's rapid rise in the cyber industry. Rapaport founded Wiz in 2020 with his former Adalom co-founders, and the company is based in New York.
Wiz, a Fortune Cyber 60 company, has raised $900 million from backers including Sequoia, Lightspeed Venture Partners, Index Ventures, Insight Partners, Salesforce Ventures, and Raanan's Cyberstarts, and is valued at Reportedly $10 billion.
financial times newspaper reported in March that Wiz was considering raising up to $800 million in a new round that would value the company at more than $10 billion. Rapaport declined to comment directly on the report, but was open about the inbound interest Wiz is receiving.
“With over $350 million, our expansion in the US, AI, and the acquisition of Gem, which is now public, we're excited about the funding. We're seeing a lot of interest from investors. ” says Rappaport.
2024 will be the “year of acquisitions”
Part of Gem's speed of acquisition can be attributed to the common language between Rappaport and Zilberstein. The two have a lot in common, as is quickly apparent as they chat on a Zoom call. Both sit against a backdrop of evocative art (there's also a painting of co-founder Costica on Rappaport's side). They both let me know that they have border collie mixes and I'm so excited.
And then there's also how they met. More than a decade ago, Rappaport and Zilberstein both served in Unit 8200, the Israeli Defense Force's elite cyber division. It is a program that screens through thousands of candidates and ultimately hires the top 1%.
Rappaport also brought to bear his own experience as a founder whose company was acquired. “Mr. Assaf is a former founder who sold the company, and he contributed 100 percent,” Mr. Zilberstein said. “That was a valuable part of the trust we were able to gain as part of this transaction.”
Listening to Rappaport, there could be more Wiz trades in the near future. The CEO of Wiz calls 2024 “the year of acquisitions” and is now asking himself: How can we find the next great company that will grow in the security market?”
Raanan, who founded the venture capital firm CyberStarts and was an early investor in Wiz, says the M&A strategy is a sign of the startup's maturation, even though it was founded just four years ago. Then you will be able to accomplish things that you could not do or that would take a lot of time to accomplish. ”
That's quite a change for someone who didn't own a car and met VC at a comically tableless gas station convenience store more than a decade ago. I asked Raanan what he knew as he reflected on that moment. Raanan thought about the question very seriously before answering.
“When I meet founders, I ignore the product idea, I ignore the technology, I ignore the market,” he said. “Back in 2012, it was all about the pitch, the product, the market, everything, but that whole setup, that whole interaction, it was like pure gold…I see young individuals who can do it all. I felt that. “
