YL Ventures Opens $400M Cybersecurity Investment Fund

May 11, 2022

YL Ventures launched its new $400M fund, YLV V, bringing its total capital under management to $800M. The significantly oversubscribed fund is the largest seed stage cybersecurity-focused fund ever raised, bridging Israeli innovation and the US market. The fund will continue the firm’s long-standing strategy of supporting Israeli founders from inception through every critical stage of building a category-leading company and bolstering its position in the global market.

This large fund will be used to both lead the seed rounds of approximately 10 startups at a pace of 3 startups per year, and to invest in the companies’ follow-on rounds, creating a strong support mechanism and providing entrepreneurs with a long and stable runway for growth regardless of the market environment. This highly selective strategy directs YL Ventures towards the highest tier of Israeli cybersecurity innovation and allows the firm to dedicate the full breadth of its resources and attention to supporting its portfolio companies from seed to growth, in both capital and hands-on effort.

Israeli startups have secured their place as top performers in the global cybersecurity market. With growing enterprise needs and ample room for innovation, YL Ventures has doubled down on this demonstrably successful sector, consistently delivering top decile returns to its Limited Partners. YL Ventures’ 2017 fund, YLV III, invested over $130M in seven portfolio companies. Within only five years of the fund’s launch, its impressive interim results place it among the top-performing VCs worldwide and include a net TVPI (multiple of invested capital) of over 5X, a net DPI of 3.4x, and a net IRR of 110% - well above the IRR of the top performing US-based VCs (84%) based on Preqin’s data in the relevant vintage year, and placing the fund at the top decile IRR return for that vintage year - according to the latest Pitchbook Benchmarks. YLV III is still active, guiding and supporting its startups towards growth. As such, these figures present the realized successes, which are only part of the full potential of the fund yet to come.

YL Ventures maintains a unique dual presence in both Tel Aviv, Israel and in the US (San Francisco and New York), led by Managing Partner Yoav Leitersdorf, Senior Partner Ofer Schreiber, Senior Partner John Brennan and newly promoted Partner (Marketing) Sharon Seemann and Partner Michael Cortez. The firm’s multidisciplinary team of 21 professionals manifests the firm’s core strategy of complementing its founders’ technological abilities with a wide range of critical services across every operational domain of company-building. This value-add support begins as early as the founders’ ideation phase and continues through market research and validation, access to potential customers and business development, marketing, GTM, HR, finance and operations.

“YL Ventures sets the gold standard for value-add VCs,” says Avi Shua, CEO and Co-founder of YL Ventures portfolio company and cybersecurity unicorn, Orca Security. “From its incredibly talented team to its unparalleled industry network, YL Ventures houses the perfect support structure for Israel-based cybersecurity startups.”

The firm’s support of its portfolio companies extends well beyond its core team with access to one of the largest cybersecurity networks in the VC ecosystem and a Venture Advisory Board of over 115 Chief Information Security Officers (CISOs) and senior executives. These luminaries, hailing from Fortune 500 companies such as Google, Airbnb, Microsoft, Amazon, CrowdStrike, Reddit, Intuit and General Atlantic, provide the firm’s portfolio companies with vital customer insights and take an active role in pre- and post-investment processes.

“YL Ventures has a deep understanding of founders’ needs, a drive to find the next generation of cutting-edge solutions and the expertise to support these startups from the very beginning,” says George Kurtz, Co-founder, CEO and President of CrowdStrike and a YL Ventures advisor. “My role on YL Ventures’ Advisory Board enables me to meet incredibly talented technologists and meaningfully impact emerging security solutions for enterprise use.”

The firm’s track record includes Israeli cybersecurity unicorns Axonius and Orca Security, along with several successful, high-profile portfolio company acquisitions by major corporations including Twistlock (acquired by Palo Alto Networks), Medigate (acquired by Softbank-backed Claroty), Hexadite (acquired by Microsoft) and FireLayers (acquired by Proofpoint).

“For the past 15 years, our primary priority has been providing our portfolio companies with everything they need from the very beginning in order to break into the global market,” says Yoav Leitersdorf, Managing Partner at YL Ventures, “We plant the first seed in these budding startups and then continue to support them as they blossom, succeed and shatter their categories. Our resources and expertise in the cybersecurity industry, reinforced by YLV Fund V, will serve to cultivate the next generation of Israeli top-tier talent from seed to lead.”