At US $6B, Cyber Exceeded Total Defense Contracts in 2014
TEL AVIV — Israeli companies exported some US $6 billion in cyber-related products and services last year, a peak figure which surpasses the amount of Israeli defense contracts signed in 2014.
The latest data from Israel's National Cyber Bureau (NCB) shows a surge in cyber exports from US $3 billion in 2013 to $6 billion last year. According to NCB, that constitutes about 10 percent of the estimated $60 billion global cyber market.
And when compared to Defense Ministry figures of $5.66 billion in new contracts signed in 2014, it means that for the first time, Israeli firms tallied more in cyber orders than in traditional aerospace and defense business.
"The cyber market in Israel is growing at a very rapid pace," said retired Maj. Gen. Itzik Ben-Israel, head of the Interdisciplinary Cyber Research Center (ICRC) at Tel Aviv University. "Last year, Israeli cyber exports constituted about 8 percent of the global market. This year it's 10 percent. Since 2013, the number of cyber companies here grew by 25 percent. And investments in new start-ups grew by some 40 percent. That's huge."
According to Ben-Israel, the actual amount of export orders concluded by Israeli companies — or multinational companies that do cyber business here — could be even higher. The $6 billion figure reported by Israel's NCB reflects only what the companies report to the government, he said.
"Unlike in defense, which is highly regulated, in cyber it's a free market," said Ben-Israel, a former head of the government task force that presaged Israel's NCB. "So just as companies don't need permission to sell civilian cyber-related products and services, they don't have to report every contract to the government."
Nevertheless, Ben-Israel said it was hard to compare the vitality of Israel's cyber sector to that of the defense and aerospace sector due to the overlap of companies selling to civilian, dual-use and defense markets.
"Remember, part of cyber is considered defense. Some companies that must report to MoD may also be reporting to the NCB," he said.
According to NCB data, 30 Israeli cyber companies attracted collective investment of $200 million during 2014. And already in the first quarter of 2015, it notes that 10 Israeli firms received $90 million, a 40 percent hike compared to the same period last year.
As for public offerings, exit sales or mergers and acquisitions, NCB noted that eight Israeli companies last year raised an aggregate $700 million. In the first quarter of this year, it listed six firms as raising some $300 million.
Ben-Israel's ICRC and the NCB, a part of the Prime Minister's Office, will host their fifth annual cyber week, an international cyber security conference, at Tel Aviv University from June 22-25.