May. 10, 2022

YLV Fund V: At $400M, the Largest Seed Fund Ever Raised for Cybersecurity

By Yoav Leitersdorf

YL Ventures, the Silicon Valley and Tel Aviv-based early-stage, cybersecurity-focused venture capital firm, today announced the launch of its new $400 million fund - YLV V, bringing its total capital under management to $800 million.

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This year, we are celebrating 15 years of excellence for YL Ventures, an exciting and transformative journey from a two-person investment group to a thriving community of brilliant cybersecurity entrepreneurs, security leaders and our team of 21 multidisciplinary professionals. Together, we’ve honed a signature, razor-sharp strategy for sourcing, investing, accelerating and helping grow top Israeli cybersecurity companies. It is my pleasure to celebrate this legacy by announcing YLV Fund V, a $400 million commitment to furthering advancements in Israeli cybersecurity innovation and the visions of the founders behind them.

Bringing YL Ventures’ total assets under management to $800 million, the oversubscribed YLV V is testament to the hard work of our founders. We recognize that brilliant technologists have their pick in today’s large pool of investors, and all of us at YL Ventures are honored to be trusted with their entrepreneurial ambitions. This is also a huge vote of confidence from our LPs, who are empowering us to do more of what we love. YLV’s third fund boasts a 110% net IRR, putting the fund at the top decile IRR return for that vintage, according to the latest PitchBook Benchmarks.

With these new fund developments, we’re doubling down on our commitment to do right by our founders with even more support from ideation to growth. Fund V is the largest seed fund ever raised entirely for cybersecurity, and it will be concentrated on our cherry-picked portfolio of cybersecurity companies–a selective strategy that we fully intend to continue. We will use it to lead the seed rounds of 10 startups, at a pace of 3 per year, while ensuring that our founders have ample backing across their follow-on rounds to weather an unpredictable economy and potentially challenging future market.

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Building real companies

Today’s Israeli cybersecurity founders are looking to build massive companies with the possibility of taking them public. However, sustainably building out such companies from a small founding team requires a great deal of support. With the support of intensely hands-on, early-stage investors, founders can focus their talents on what they do best to significantly accelerate their company’s progress towards sustainable unicorn status and shave valuable time off of their startup’s building process.

Fund V will enable us to further expand our in-house value-add expertise and support, bolstering our portfolio companies’ business development, marketing, product, HR and operational capabilities. This includes helping our founders build go-to market strategies and establish product-market fit, making more customer introductions, sourcing key executive hires, working with them on their brands and initial marketing strategy and sourcing follow-on investments. These value-add resources have been demonstrably helpful in enabling our founders to dominate their respective verticals as early and quickly as possible. In fact, over 40% of our portfolio companies’ customers within their first two years of founding came through YL Ventures’ introductions.

Keeping a focused strategy

We fully intend to remain bullish on cybersecurity. Our commitment to back the future of the industry is borne out of our genuine desire to keep doing what we love and further develop our proven and unique approach to investment and value-add support across all aspects of company building. However, cognizant of the recent critiques of the cybersecurity investment landscape, we’d like to shine a light on the importance of transparency and process around key metrics that drive success and valuation. YL Ventures doesn’t believe in shortcuts, and we know that it takes a lot more than a good idea and enthusiastic investors to build a long-lasting unicorn.

Building real, sustainable cybersecurity category leaders requires a heavy investment in the process and a focus on the ultimate product. Our market expertise enables us to guide founders through shifting product roadmaps and changing organization structures. We also work closely with a vast network of cybersecurity leaders and an advisory board of more than 115 CISOs and executives who guide our founders across the entire length of the validating process, share customer perspectives, help achieve product-market fit and serve as a potential customer base. Moreover, keeping our number of investments small ensures our bandwidth remains in our founders’ favor.

Celebrating the YLV team and community

YL Ventures’ momentum is owed to the YLV team, spread out across Israel and the US. Our investment and BD teams, led by my fellow senior partners Ofer Schreiber and John Brennan, have been essential in creating an important cultural bridge between our Israeli founders and American counterparts, securing potential customers, establishing meaningful partnerships, and helping turn customer-driven insights into product functions and features. Our Operating PartnerCISO-in-Residence and Hacker-in-Residence provide even more technological feedback in-house, helping shape the full suite of capabilities that make up a proper flagship cybersecurity solution. Our marketing team, which has surpassed any possible industry frame of reference, works tirelessly with our founders to capture mindshare early with everything from marketing strategy, content and events, to digital marketing and excellent PR. Finally, our incredible operations and HR team have done tremendous work in helping address the hiring woes of today’s cybersecurity recruitment market and sustainably scale.

As a testament to their remarkable efforts, it is my pleasure to share the well-deserved promotions to partnership of two phenomenal YL Ventures professionals: Sharon Seemann for her groundbreaking leadership work on both YL Ventures’ brand and our portfolio companies’ marketing support, and Michael Cortez for his excellent work in supporting our portfolio companies’ customer lifecycles and growing our advisory network.

Looking forward

The cybersecurity industry is energizing, intellectually stimulating and has a veritable impact on our daily lives. Mixed with the rollercoaster of early-stage company development, we all come into YLV every day fully dedicated and invigorated by the endless challenges that accompany such a hypercompetitive field. As far as we’re concerned, YLV V means business as usual–but better. We will plant the first seed in these budding startups and 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.