Once $5 billion IPO bound, Cybereason merges with Trustwave amid decline
Once $5 billion IPO bound, Cybereason merges with Trustwave amid decline
The Israeli-founded company’s 90% valuation plunge and layoffs underline the challenges of today’s cybersecurity market.
Israeli-founded cybersecurity company Cybereason is merging with Trustwave, an American cybersecurity firm. While the details of the merger have not been disclosed, SoftBank will remain the majority investor in the new company. According to the companies, they will continue to operate independently but plan to “collaborate strategically on value-added services and capabilities to expand market presence and bring greater cybersecurity value to their client base.”
The companies hope the merger will help them compete in a saturated market by offering a more comprehensive and integrated cybersecurity solution. This includes combined strengths in managed security services, offensive security, digital forensics, incident response (DFIR), detection and response (EDR), email security, and database security.
The merger marks a significant shift for Cybereason, which once aimed to go public with a $5 billion valuation. The company’s trajectory has changed drastically since being on the verge of an IPO in 2021. It has experienced a 90% drop in valuation, layoffs affecting hundreds of employees, the resignation of its CEO, and an effective takeover by its primary investor, SoftBank.
Cybereason had planned to go public after raising $325 million in 2021 at a $3.1 billion valuation. However, little has gone as planned. Amid a challenging economic environment in 2022, the company implemented three rounds of layoffs, cutting dozens of jobs earlier this year and over 300 in total.
Founded in 2012 by Lior Div, Yonatan Striem-Amit, and Yossi Naar, Cybereason competes with companies like CrowdStrike and SentinelOne, offering services such as ransomware protection and malware prevention. Over its 11 years of operation, the company raised $850 million, with SoftBank as its primary investor.
A notable highlight was the 2021 funding round, where Cybereason raised $325 million, led by former U.S. Treasury Secretary Steven Mnuchin’s Liberty Strategic Capital. Neuberger Berman, Irving, and SoftBank also participated, valuing the company at approximately $3.1 billion. That same year, Cybereason filed a prospectus for an IPO, targeting a $5 billion valuation. However, the economic downturn of 2022 altered the company’s trajectory. At its peak, Cybereason employed around 1,500 people but had to acknowledge over-hiring amid global economic challenges. Compounding the difficulties, SoftBank—reeling from losses tied to its WeWork investment—demanded immediate and significant cost-cutting across its portfolio companies.
In April 2023, Cybereason raised $100 million from SoftBank, coinciding with Lior Div’s resignation as CEO. He was succeeded by Eric Gan, a SoftBank executive with extensive knowledge of the company. Div and co-founder Striem-Amit have since launched a new cybersecurity startup, Seven AI, which raised $36 million in Seed funding.
According to a Delaware stock authorization form reported by Axios, Cybereason’s new Series G shares were priced over 90% lower than their 2021 value, implying a valuation of $300–400 million.
“Today’s news marks an exciting evolution in the cybersecurity industry,” said Eric Gan, Chairman and CEO of Cybereason. “As the cybersecurity landscape continues to evolve, organizations are seeking more comprehensive solutions that integrate technology, services, AI, and human expertise to keep threat actors at bay. Cybereason, with its strong presence in Japan, is particularly excited to expand our combined EDR and MDR solutions in this market, where we have already seen considerable success. This partnership strengthens our capabilities across MDR, offensive security, DFIR, and consulting services, enabling us to deliver greater value to clients globally and to our partners in the cyber insurance and legal industries.”
Trustwave, founded in 1995, was acquired by Singtel in 2015 for $770 million. However, it was sold earlier this year to MC² Security Fund, a private equity firm sponsored by The Chertoff Group, for just $205 million.
