SAN FRANCISCO and TEL AVIV, Israel, Dec. 10, 2024 (GLOBE NEWSWIRE) -- Global cybersecurity venture capital firm, YL Ventures, today released its predictions for the most promising cybersecurity sectors in 2025. The firm's expertise in identifying disruptive security trends and supporting pioneering startups has established it as a trusted voice in the global cybersecurity ecosystem. This reputation is supported by its recognition as a PitchBook top 10 best-performing VC firm for two consecutive years. Following a record-breaking year for Israeli cybersecurity seed funding, reaching over $372M across 47 funding rounds, 2025 has the potential to be another exceptional year for this ecosystem. Drawing from extensive data analysis of emerging security spaces and Israeli cybersecurity seed funding trends, YL Ventures has identified the following key areas that are poised for significant growth and innovation.
Leveraging AI to Optimize Security
In the past several years, we’ve witnessed the rising adoption of AI for improved business purposes, directly leading to the rise of startups that are enabling the safe and secure adoption of AI technologies within enterprises. In 2025, we foresee AI being used to disrupt existing security spaces such as Security Operations, Identity and Access Management, Penetration Testing, Threat Intelligence, GRC and more, enhancing their solutions and making them more robust. We anticipate this innovative approach to leveraging AI to be adopted by other security sectors as well. Cybersecurity entrepreneurs, some still in stealth, are considering the next wave of AI innovation for the security sector, AI agents. Leveraging AI to make manual, time-consuming tasks more efficient may be an emerging investment space global VCs should closely track.
Security Operations (SecOps) Leads Industry Evolution
Security Operations is the leading security sector adopting AI for improved performance and efficiency. Our data indicates that SecOps is positioned as a frontrunner in cybersecurity advancement, with 6 new startups founded in this space in Israel alone in 2024. The SOC (Security Operations Center) is known for its manual, time-consuming processes, making it a perfect space in which to leverage the efficiency of AI agents. AI adoption in this space will allow SecOps teams to build robust security infrastructures capable of withstanding, responding to and recovering from breaches. This paradigm shift towards a more proactive and resilient approach, along with the likelihood of an increase in AI-based attacks in the future, requires more than just tools; security solutions must adapt and be able to move at AI speed, with integrated processes, continuous monitoring and optimized response capabilities, which AI adoption will support.
Non-Human Identity Security Becomes Critical
Research presented in CyberArk's “2024 Identity Security Threat Landscape Report” reveals a stark reality: machine identities now outnumber human identities by 45 to 1, and are constantly growing. Despite this trend, only 15% of IT and security professionals feel confident in their ability to secure these identities, even though machine identities were at the core of several high-profile incidents like the Snowflake hack and New York Times source code theft in 2024. NHIs, including ubiquitous API keys, OAuth tokens and service accounts, are often poorly monitored (Cloud Security Alliance data shows that only 20% of organizations have proper processes in place to manage these keys and accounts), making them prime targets for attackers. As this blind spot becomes more clearly defined, we can anticipate that 60% of organizations will plan to invest in Non-Human Identity security, making this sector ripe with significant opportunities for innovation and growth.
The Cloud Security Evolution
Our data indicates that in 2024, 14 cybersecurity startups focusing on Cloud Security raised funding rounds in Israel alone, an increase from only 6 such rounds in 2023. With the CNAPP category maturing, driven by leaders like Orca and Wiz, founders are shifting their focus to building startups in emerging spaces within the general Cloud Security landscape, creating opportunities for innovative startups to fill these gaps. As cloud environments grow more complex, emerging vectors are poised to drive further innovation and funding in 2025, solidifying Cloud Security as a key frontier in cybersecurity.
Modern Data Loss Prevention (DLP) Addresses Remote Work Challenges
The increasing complexity of modern IT environments, characterized by remote work, data sprawl and a multitude of applications and endpoints poses significant security challenges, making traditional Data Loss Prevention (DLP) tools irrelevant in size, scope and abilities. With 21% of breaches in 2023 targeting remote work environments, new DLP solutions, tailored for the modern workplace with improved visibility and control over sensitive data through inventory, improved classification thanks to the use of AI technology and advanced protection, are becoming increasingly sought-after. According to Forrester’s “The State of Data Security” (July 2024), 83% of enterprises currently use endpoint DLP, but only 13% have fully deployed their data security capabilities in the cloud. This gap, combined with growing privacy and compliance demands, positions next-generation DLP solutions as critical components of future security strategies.
"The cybersecurity landscape is evolving rapidly, driven by the exponential growth of machine identities, the need for efficiency in security operations and the persistent challenges of securing sensitive data," said YL Ventures’ Senior Partner Ofer Schreiber. "The substantial increase in investor interest in these three cybersecurity domains underscores the industry's maturity and the pressing need for efficient, automated and proactive solutions to combat increasingly complex and sophisticated cyber threats. These sectors represent not just challenges but significant opportunities for innovation and investment in 2025."
YL Ventures has invested in early-stage cybersecurity startups for over fifteen years and focuses on helping its entrepreneurs build their company foundations while positioning them to become future category leaders in the global market. The firm employs a unique value-add strategy to support its portfolio companies by leveraging its multidisciplinary team of experts that guides the firm’s portfolio founders on the most crucial company-building elements, at their earliest and most consequential stages.
About YL Ventures
YL Ventures funds and supports visionary cybersecurity entrepreneurs from seed to scale to help them evolve transformative ideas into market-leading companies. The firm accelerates company growth with tailored support through its powerful network of Chief Information Security Officers, global industry leaders and a dedicated team of multidisciplinary experts. Based in Silicon Valley, New York and Tel Aviv, YL Ventures manages five funds with $800M in total AUM. The firm has a track record of seeding cybersecurity unicorns such as Axonius and Orca Security, and its portfolio companies have been successfully acquired by high-profile, global industry leaders including Palo Alto Networks, Microsoft, Okta and Proofpoint. PitchBook has ranked YL Ventures as one of the ten best-performing venture capital firms for two consecutive years (2022, 2023) in its prestigious Global Manager Performance Score League Tables, and the firm is the only cybersecurity-focused VC to secure a top 10 spot on the list.
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Deb Montner
dmontner@montner.com
