Israeli cyber startup CloudEssence, founded just 6 months ago and develops a security platform for Cloud Native applications, has been acquired by American cyber company Contrast Security. The exact sum of the deal has yet to be reported but estimated to be in the multi-million dollar range.
A development like this, only during COVID
CloudEssence develops a system for securing Cloud Native applications through security testing as part of the development process (DevOps). The company’s technology enables developers to write and push secure code in a fast and simplified way. The company reports that its system can conduct autonomous SAST and DAST testing, leading to quality, accurate results within minutes, without the need for any kind of complex installation.
CloudEssence was founded just a few months ago by 3 founders: CEO Ram Yonish, former CEO and co-founder of Cymplify, which was acquired by Check Point a year ago; CTO Tal Melamed, a world-renown security expert; and VP R&D Itay Rozenman, the former R&D leader of Cisco’s cloud security solution (formerly CloudLock).
In a conversation with Geektime, Ram Yonish explains that the company was in the midst of fundraising and meeting with investors, with secured term sheets already on the table, until a meeting with one of the biggest insurance companies in the U.S. led to the acquisition. Yonish tells that CloudEssence demoed its product to a company in order to get some feedback, and the head of cloud security really loved the product - but did note that CloudEssence was too small, so he referred them to one of the vendors with whom he worked.
That vendor turned out to be Contrast Security, “within the hour, they gave us a call and wanted to see what we do because they were stuck on a certain problem.” According to Yonish, “the reason they ended up acquiring us so fast was because our vision aligned with their focus.” From there, the road to Contrast Security acquiring CloudEssence was very short.
However, Yonish adds that “I wasn’t aiming for an acquisition, but when you develop a new product, you need to know your customers - what problem are you solving and how you do it better than your competitors; and identify the bigger market players that can acquire you, and understand at every given moment who is in need of your technology.”
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Yonish highlights that due to COVID, product development was highly accelerated. “We initially developed a working product in record time, using AWS allowed us to quickly prove that our technology works,” said Yonish.
He also tells that there was no prior familiarity between the founding trio. He had a superficial acquaintance with Melamed after their companies were acquired by Check Point. We’ll remind you that Check Point’s acquisition of Cymplify was also fairly unusual, with the company being acquired for millions of dollars based solely on POC.
After Yonish left Check Point, Melamed came calling with a suggestion to follow the success of Israeli cyber giant Checkmarx and found a company in the same sector. “After the Checkmarx acquisition, I realized that the market was heating up. I checked Tal’s background and thought that there was something here, he’s an interesting guy. When he left (Check Point), we decided to go for it, and he brought another guy with him - Itay,” explains Yonish.
Yonish further added that despite COVID, the company will lease office spaces in order to feel “like a startup inside a startup,” because the acquiring company is still a private one that has raised around $120 million since it was founded in 2014.
The company’s Israeli R&D center will be located in Tel Aviv inside of WeWork, with the grand opening slated for next month, and the company is already recruiting developers to advance the development of its cloud security product. Following the acquisition, Yonish will head the Israeli operations, acting as Contrast’s Cloud Native VP. Tal Melamed will take over the product lead as Senior Director of Cloud Native, and Itay Rozenman lands the Cloud Native engineering Senior Director role and will lead all of the company’s Israeli R&D efforts.