Cyber Startup Cato Networks Hits $3B-Plus Valuation After $238M Raise

Both cybersecurity funding and venture dollars to Israeli startups are down, but that doesn’t mean they have dried up.

Tel Aviv-based Cato Networks locked up a $238 million round led by Lightspeed Venture Partners at a valuation of more than $3 billion. The new valuation is an uptick from the $2.5 billion the company was valued at after its $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. Cato has now raised $773 million, according to the company.

Cato Networks offers customers a secure access service edge, or SASE, platform. Those platforms help deliver networking and security from the cloud to a company’s network edge, avoiding potential bottlenecks in the datacenter.

With more companies moving operations to the cloud and toward edge computing, such security is seen as more vital. Large companies like Zscaler and Palo Alto Networks offer such platforms, as do startups like Santa Clara, California-based networking and cybersecurity firm Versa Networks. Versa closed what the company called a “pre-IPO round” of $120 million nearly a year ago.

Funding to Israeli startups

Israeli startups have witnessed a titanic drop in funding this year. In the second quarter, startups in the country saw a 67% year-to-year drop in funding, falling from $2.7 billion in Q2 last year to less than $900 million in Q2 this year, according to Crunchbase data.

Israel-based cybersecurity funding, in particular, has been a catalyst for that drop, with Q2 cybersecurity startup funding in the country dropping 87%, per Crunchbase data.

While funding is down nearly everywhere this year, Israel has its own set of issues when it comes to venture and its startup ecosystem as the country faces significant political upheaval that seems to have made investors wary.

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