Gili Raanan
speaker
558 appearances
2 recordings
2 series
first heard Mar 2025
last heard 28 Mar
Gili Raanan’s voice in public audio — every appearance, attributed to the second.
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Appearances
A lot of what happened in that fund relates to a lot of learnings and mistakes I've made earlier in life.
In 2018, I just exited one of the best VCs in the world, Sequoia Capital, amazing team, spent a decade as a general partner. And beforehand, I've been a founder and CEO of two software companies. And my conclusion back in 2018 was that the venture model is completely broken. It's broken in so many ways. It's broken for investors and it's broken for the entrepreneurs.
Investors have spent endless amount of time asking about markets and products and technologies, which founders at a very early stage, at the seed stage, clearly they don't have the right answer. They don't have an idea. And whatever they tell the investor, Anyway, it would change within a few weeks and then change again and change again and change again.
And everyone are simply playing a game and dancing the dance, but they're just paying tax to the system. It has no value, especially it has no value for the recipient of the solution because they are not even involved in that dialogue.
So when I founded CyberStarts, I made one very important commitment to completely avoid questioning the market, the technology, the product, the competitive advantage, and focus on one thing only, which is the person ahead of me. Focus on the talent. The other thesis I had is hunting for adversities.
I'm looking for people who are not straight lines, who didn't have a perfect start for their life and managed to overcome it and become successful, although they didn't have a perfect starting point for their life. I had a very stumbled beginning for CyberStart, started with a $50 million fund, super small.
And the first fund I was investing alone out of my office was a, still is today, a shipping container I converted into an office situated in my backyard. And I invested in nine teams. And I was the lead investor in all those teams, made rebates in people without ideas. And many people thought that's pretty crazy, a grown-up. Writing large checks to people without idea, that seems pretty odd.
And then three years later, in 2021, I realized that the portfolio of those nine teams is valued over $25 billion, converted the $50 million into close to $2 billion, and more importantly, had a terrific set of companies. Companies like Wiz, EdekaCon, the leader in cloud security, amazing team, we can talk about them a lot.
Companies like Island Security that invented the enterprise browser space and today is a company that valued at around multi-billion dollars. Companies like Fireblocks, which is the largest blockchain custody service for enterprises, which valued at $8 billion.
And as you know, in our business, if you invest early on in terrific companies, if you invest early on in DoorDash or Airbnb, you'll do disgustingly well.
But a hit rate of four or five Unicorn, including one DecaCorn and a few other companies that each of them got acquired for hundreds of millions of dollars each, that hit rate was a proof point that there's something right about the model, about the thesis.
But on top of luck, I think Warren Buffett once said, as he works harder and harder, he becomes luckier and luckier. So definitely luck is important. But I think the major factors here are a clear thesis. Cyber start is one simple thesis, one sector and a commitment to deliver real value to the founders we partner with.
the clarity of that thesis and the fact we focus just on a single sector and we own it the founder selection criteria and i would love to share some example later on and the fact that we made our decision making process super simple by completely eliminating considerations like market, technology product, competition, business plan, pricing, whatever it is.
So we do not waste time on those things initially. We spend our time making sure that we bet on the right outlets. So luck, thesis, founder selection criteria, and then I would add two other factors. One is the commitment we have to get the product market fit as fast and as efficient as you could. And that's the whole story of our Sunrise Day program.
The service program means that you do not develop technology or solutions in a vacuum, that you build software, that you build software solutions that people really need and can use on a daily basis. And I would say the last element is that I'm surrounded by four amazing partners. Each of them is adding tons of experience and value and knowledge and coming from different backgrounds.
I think all those five elements, like CyberStarts, what it is today, and just to continue the story of CyberStarts, today, with all the humble beginning we had, we manage more than $700 million under management across five funds, four seed funds and one continuation fund.
The portfolio value today, cumulatively, is around $45 billion, which is 50% of the worldwide market cap of private cybersecurity companies. 50%. That means that we seeded 50% of the worldwide market cap for private companies in cybersecurity. And that's under seven years.
Yes. We believe in cybersecurity. Give us another seven years and let's see where we can go from here. Each of the four active funds delivered over 100% IRR to investors. So this is not just a case of one successful first fund and then living on the success of that fund. I think that we deliver value to founders and to limited partners across all the funds systematically.
My personal experience as founder and builder taught me that startup is an insanely painful journey. It's super hard. And like it or not, you're going to face a lot of challenges. And that made me believe I shouldn't simply look for the smartest person in the room. High IQ helps. It's not a bad thing, but it's not the most important thing.
The most important thing in my view is the adversity and the ability to overcome it. For me, this is the greatest signal, the best signal for a terrific founder. Take, for instance, Fireblocks founder and CEO Michael Schoenloch. Let's start with the company so you understand the context. But Fireblocks is the leading crypto asset custody service for enterprise.
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