YL Ventures Portfolio Company Twistlock Acquired by Palo Alto Networks for over $410 Million

Earlier today, Palo Alto Networks announced its $410 million (plus adjustments) acquisition of Twistlock, the cloud native cybersecurity portfolio company of YL Ventures. At a meeting in our office four years ago, before Twistlock even got its name (let alone its products, employees, customers or revenues), my partner Ofer Schreiber and I recognized the vast potential of founders Ben Bernstein (CEO) and Dima Stopel (VP R&D) to capture the nascent but exponentially-growing market of securing virtual containers. These founders’ attitude convinced us they could execute – both shared a quiet charisma that blended introspective intelligence with confident vision.

Within hours of that meeting we had Ben and Dima speak to several of our trusted advisors in the U.S., including Justin Somaini (former Chief Security Officer of SAP), Stacey Halota (VP, Information Security & Privacy of Graham Holdings) and Tim Mather (former Chief Information Security Officer of Cadence Design Systems). Market feedback and founder references were overwhelmingly positive, so we seeded Ben and Dima with $2 million and got to work helping them build the world’s most robust cybersecurity platform for digital transformation. I was quoted telling VentureBeat at the time: “These Twistlock founders are really great guys, and they will get really big really fast with the surge in container adoption and the burning need for security in production deployments.” Eventually, the company expanded beyond securing virtual containers to securing the entire cloud-native stack – this broad long-term vision of a ‘platform’ rather than a ‘point solution’ eventually fueled Twistlock’s meteoric growth.

The first recruits were Liron Levin (Chief Architect) and John Morello (CTO), who ultimately maintained Twistlock’s edge by consistently and effectively anticipating customer needs and implementing customer feedback, and by simplifying implementation and prioritizing the preferences of developers and DevOps teams. Ben very quickly moved to the U.S. to be closer to the market, and shortly thereafter Twistlock was already deployed with some global customers. Ben and Dima were wise to continue to invest in world-class leadership and guidance. They hired Brian Lake (CRO) and Josh Thorngren (VP Marketing) to build a masterful go-to-market machine that devoured market share. Then came Pini Karuchi (VP Finance) and John Leon (VP BD), and together with Chairman of the Board Brendan Hannigan (of Polaris Partners and formerly GM of IBM Security) we had this once-in-a-lifetime dream team that every venture capitalist aspires to back. What a privilege it is to work every day with such outstanding entrepreneurs!

And Twistlock had about 300 enterprise customers, over 250% year-over-year ARR growth, 35 of the Fortune 100, 7 of the Fortune 10, 4 of the 4 branches of the U.S. Department of Defense, nearly all of the departments of the U.S. Cabinet, and most of the top logos in banking & finance, healthcare, technology, media and retail. Collaborations with NIST, CIS, Google, Amazon Web Services, Docker and countless other partnerships meant everyone was sooner or later working with Twistlock. To top it all off, Ofer and I were fortunate to serve on Twistlock’s board of directors with some of the world’s smartest cybersecurity investors, including Matt Jacobson of ICONIQ Capital, Alex Doll of Ten Eleven Ventures and Charles Beeler of Rally Ventures. Another great investor that we were fortunate to recruit early on was Dell Technologies Capital. As I look back I can say that Twistlock was immensely successful due to the combination of its extraordinary people (management, workforce and board) and a massive perfectly-timed market opportunity.

It was a tough decision to sell, certainly for Ofer and me. YL Ventures was the largest shareholder of Twistlock, which was a substantial and infinitely-promising star in our portfolio. We feel like we had helped birth and raise Twistlock. And here we are, after four years of product releases, customer introductions, press interviews, executive hires, board deliberations and multiple rounds of financing in which we always invested the most that Ben and Dima would let us, the time has come for our child to leave the nest: The founders felt that selling at that time was the right decision for them and for the company, and of course we supported them.

Palo Alto Networks is a global cybersecurity leader. It serves over 85 of the Fortune 100 and more than 63% of the Global 2000. 2018 revenues were $2.3 billion, a 29% year-over-year increase. Its Security Operating Platform is world class. It is the perfect home for Twistlock as it will enable the team to take their award-winning cloud native security platform to Palo’s 60,000+ customers in over 150 countries virtually overnight! And it will provide our guys with a rare opportunity to work closely with Palo’s impressive Nikesh Arora (CEO), Nir Zuk (Founder & CTO), Lee Klarich (CPO), Vats Srivatsan (CSO) and their remarkable teams.

As we got to know Nikesh’s organization, it became clear to us that it is possible for something as great as Twistlock to get even better. Better together: Twistlock + Palo Alto Networks. And so it is with great pride that the entire YL Ventures team congratulates Ben, Dima, Nikesh, Nir and their esteemed colleagues for joining forces and taking cybersecurity to the next level!

Yoav Leitersdorf (left) and Dima Stopel in San Francisco discussing the final terms of Twistlock’s acquisition (May 2019).

Ben Bernstein (left) and Ofer Schreiber (right) at a YL Ventures event in San Francisco. In the background: Tim Mather.

Sharon Seemann of YL Ventures, Ben Bernstein, Yoav Leitersdorf, Dima Stopel and Pini Karuchi at a YL Ventures event in Tel Aviv.

Twistlock’s all-star R&D team in Herzliya.