Gili Raanan

Venture doesn’t work — by design. Gili’s opener: “The venture business as a whole doesn’t work. It shouldn’t work” — returns concentrate in a handful of franchises (Sequoia, Andreessen, Benchmark, Greylock, Lightspeed), and given today’s capital inflows he expects “some serious catastrophe for many of the players.” An LP who spread their venture allocation evenly “wouldn’t sleep well at night.”

The seed math is deteriorating: ~350–400 new cybersecurity teams get funded every year, the hit rate is “one out of 150, maybe two out of 150,” and Israel — roughly 40% of the global market — minted just two unicorns in 2025 and one in 2024, versus the 2021 outlier of around seven that “changed the mindset of investors.” With seed entries at “150x and 100x ARR” versus a $15M post for Assaf Rappaport’s Adallom in 2012 that Gili qualified with “if I’m not wrong,” “a lot of that cash that’s flowing into the market would be wasted.”

Harry’s boomer challenge — CrowdStrike/Palo Alto-sized outcomes justify bigger entry prices — is accepted “with all humbleness” but doesn’t move him: “It would not change the probability facts around this game… we analyze smoke,” because founders reinvent product and market within weeks of a seed check.

Fast growth is DNA: likely Wiz went $1M→$2M→$8M→$24M by quarter in its first year of selling software, and the bar for greatness — 4x/4x/3x/3x on new ARR, 144x over five years — hasn’t moved in the AI era. He’s confident someone will prove “Wiz was a slug” within five years.

Gross margins matter, but wait until 2029: he has never once discussed gross margins with an early-stage portfolio company — “gross margins are important. Let’s talk about it in 2029” — though he suspects gross margins will continue to matter for AI too. Overcapitalized founders never worry him: “I’m not in a business of babysitting founders.”

IPO is a branding event, not liquidity — “it’s hell for liquidity” — so the private-market extension is “functional and sustainable,” and recurring employee-tender secondaries (Cyberstarts’ employee liquidity fund, first program just done with Ayera, as heard) are the structural fix for fully-vested talent walking out. His confessed mistake: “I regret I sold every single share at Wiz.”

To investors whose frameworks (rule of 40, triple-triple-double-double) are kind of out the window, the closing counsel: “Learn as much as you can from old farts like myself, but at the end of the day use your guts. Nobody knows better than you do.” Early-stage investing is “the science of greed” — “we need to be selfish, and we need to be greedy. Those are good traits.”

🔗 Original source & video: Why Margins Don’t Matter for Early-Stage Startups | Gili Raanan

Gili Raanan confirms the Wiz deal is still pending — the European regulator approved it “Monday,” with antitrust sign-offs in “gazillion countries” remaining — and says Wiz just posted its biggest revenue quarter ever. His verdict on the price: “you look at how amazing the business is, and suddenly $32 billion do not look irrational… we probably sold low.” He seeded Wiz with Doug Leone (Sequoia) and Shardul Shah (Index) in a $20M syndicate at roughly $66M post.

Cyberstarts’ model is deliberately heretical: cybersecurity only, seed only, and “I would not ask a single question about the idea or the technology.” The 2018 fund put $50M into nine teams; three years later they were valued at over $25B — turning $50M into ~$2B and hitting “eight out of nine, which is insane.” Raanan says the result shows logic behind the thesis, while acknowledging that luck still matters: pick founders who overcame real early-life adversity, not simply “the smartest kid in the room.”

His darkest call: “we are going to face the darkest period in cybersecurity in the next 10 years.” Threat actors become “very, very smart, sophisticated, maybe self-aware” programs; defenders must become agents too, because “no human would be able to move at the pace of a programmatic attacker” — and until humans are fully out of the defense loop, “we are exposed.” Autonomous programs control power, water, and food supply, while in his scenario the police remain human.

His top three cyber threats for 2026 are strikingly unsexy: over-provisioned systems, employees, and manual processes — “You’ll make mistakes. You’ll be slow. You’ll be sloppy.” The real emerging risks are self-aware agents (he cites evidence that Google’s Gemini 3 realized it was being evaluated and “contemplated” gaming the evaluation) and “mega-agents” with mass integrations across networks — “think about a mega-agent that developed self-awareness.”

Wiz’s economics came from a “perfect storm” of product-market fit: all four buying personas — pain, authority, user, budget — mapped to one person, the CISO, collapsing the sales cycle into a single 45-minute meeting. First four quarters of selling: $1M, $2M, $8M, $24M — faster than anything they had seen, including at Palo Alto Networks and ServiceNow; “as far as I know, that was the fastest run for any software company ever.” The company started as “Beyond Security” doing satellite-office security before shifting to cloud security.

He treats a $50B and $100B Israeli-originated cybersecurity startup within roughly six years as inevitable — “like the sun will rise tomorrow.” The mechanism is shattered glass ceilings: when the guy “from the fifth floor in your building” builds a $32B company, the next founder tells himself “I should be able to build a $64 billion company.” In 2018 the dream was a $100M sale to McAfee or Symantec.

Cyberstarts’ 30 portfolio companies — out of ~1,500 cyber ventures started in eight years — now make up “more than 50% of the worldwide market cap for private cybersecurity companies,” with Raanan believing about 10 will be unicorns by year-end. Raanan measures success by practitioner dependence, not valuation: Cyera ($9B, from zero four or five years ago), Island ($5B enterprise browser trusted by major US banks over Microsoft or Google), and Upwind ($1.5B) are “important companies”; exits are “side effects of building terrific businesses.”

🔗 Original source & video: Wiz: $6M Seed → $32B Exit | Inside the Biggest Cybersecurity Deal Ever

Raanan sees cybersecurity in a “perfect storm”: geopolitical conflict has turned offensive cyber into a strategic weapon, capabilities keep drifting from states to criminals, and AI can execute attacks at unprecedented speed and scale. The escalation runs from analysis to human augmentation, workflow automation, and ultimately autonomous control. An AI agent could generate and launch thousands of infrastructure attacks simultaneously: “This is not a future thing. That’s today.”

AI will not merely improve cybersecurity; “it’s going to redefine it,” forcing enduring vendors to become AI-first and AI-native. The same model can identify a bank’s vulnerabilities for defenders or design an attack against it, while open-source systems such as DeepSeek remove the protection of a walled garden. For Wiz, Cyera, Island, and other platforms, AI therefore requires re-architecting the product—not adding another feature.

Cyberstarts’ results support a radically simplified seed thesis: select exceptional athletes before ideas, then help them find an urgent customer problem. Its $50 million first fund led investments in nine idea-stage teams; within three years, Raanan says the portfolio exceeded $25 billion in value and the $50 million had become close to $2 billion, producing Wiz, Island, and Fireblocks. Today Cyberstarts manages more than $700 million across five funds, with each of four active funds reportedly delivering over 100% IRR.

Raanan values demonstrated adversity above raw IQ because “startup is an insanely painful journey.” Fireblocks illustrates the wager: Cyberstarts invested $3 million in June 2018, then six of the company’s first 10 design partners went bankrupt during the crypto winter; founder Michael Chodorow’s history of navigating immigration, growing up without a father, and uncertainty helped him rebuild the plan. The key interview question is not what someone accomplished but why they made each consequential choice.

The Sunrise method reverses conventional product development by investigating pain before permitting founders to write code. Teams question dozens of CISOs, ask “Who’s the vendor you hate the most?”, and test claims against actual spending or workaround behavior. They tell customers a new team will spend about $100 million over three years on engineering and ask which problem they would want $10 million of that effort to solve off-balance-sheet, then may wait six months before building: “This is your last chance to pick the right problem.”

Wiz became the clearest proof that urgency, buyer simplicity, and enterprise pricing can overwhelm seemingly high entry valuations. After abandoning a secure-access idea that was important but not urgent, Wiz found a cloud-security product for which one CISO held the pain, budget, authority, and credentials needed to deploy it. It rejected PLG for large enterprise contracts and progressed through roughly $1 million, $2 million, $8 million, and $25 million of ARR in its first four selling quarters.

Cybersecurity is not a fixed market to map but “always a derivative of something else,” so Raanan concentrates on talent and process rather than predicting categories. He believes a new cyber company can surpass Wiz’s conditional zero-to-$32 billion, five-year outcome within a decade, given the market, evolving pain, talent, and some luck. His deeper counsel is to treat investing as a “life project,” grounded in real care for founders rather than profit generation alone.

🔗 Original source & video: Gili Raanan - Cybersecurity Investment Playbook - [Invest Like the Best, EP416]