US private equity firm Spire Capital has acquired Israeli web intelligence cobwebs. No financial details were disclosed, but sources close to the deal believe that Spire Capital, which specializes in buying security companies, is paying between $200 and $250 million to buy Herzliya-based internet networks. This is an excellent exit for the company’s three founders and 170 employees given that it has raised hardly any outside money — just $12 million — and so they still hold most of the startup’s stock.
Cobwebs has developed an AI-powered Open Source Intelligence (OSINT) platform to protect global communities and organizations from cybercrime, threats, and attacks, by providing seamless access to publicly available data.
Cobweb co-founders Udi Levy (CEO), Shai Atias (CTO), and Omri Timianker (Chairman), all alumni of IDF intelligence units, will get an estimated $40-50 million each from the sale. Together, Ibex Investors of Israel and Titan Ventures will earn an estimated $50-60 million from the sale, having only invested several million dollars in Cobweb’s funding round in 2019, according to PitchBook. The two funds bought a 12% stake in that round and have increased their stake over time.
Sources close to the deal told Globes that the founders had received several offers to sell their shares for investment or to obtain loans over the past two years, but they refused, and therefore they kept their own shares, and are now enjoying the fruits of the exit. There was a good reason for their refusal. Cobwebs is a profitable business for at least the past year, as far as it is known with an estimated annual revenue of $30-40 million.
Meta has taken steps against companies involved in business intelligence
Not everything went smoothly for the company’s founders. Just under two years ago, Meta began taking steps against companies that deal in open business and intelligence, including Cobwebs, alleging that its customers, and security authorities in countries as diverse as Hong Kong and Mexico, used its technology to store information on activists. Including social workers, opposition politicians, and senior officials from the government.
Meta reported to the media in December 2022 that it had banned about 200 Facebook, Instagram and WhatsApp accounts run by Cobwebs and their clients – typically users who work for security agencies around the world. According to Meta, the company sells intelligence based in part on information pulled from its social networks, as well as other networks including Twitter and Flickr, websites and the “dark web,” the closed web that facilitates covert criminal activity. Meta said, “Accounts activated by Cobwebs agents not only collected information about their human targets, but also engaged in human engineering by using avatars in order to establish relationships with closed communities and trick users into extracting personal information from them.”
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Meta has taken action against Cobwebs accounts in Bangladesh, Hong Kong, the US, New Zealand, Mexico and Poland.
“This report is false,” Cobwebs CEO Udi Levy told Globes today. “It’s not about the type of our clients or our field of activity. We don’t offer avatars (fake accounts that allow users to be tracked on social networks, etc.), Levi insists,” Meta also reports a list of countries with which we have nothing to do.
Meta released the report on Cobwebs, at the same time as reports on other Israeli companies such as Black Cube, Cognyte and Blue Hawk and several months after documents from the company were leaked, indicating that Meta does not enforce unethical use of its social media platforms. and that the company was aware of the risks its algorithm created for the public.
Levy recalls, “It was a difficult period where you had to prove you had nothing to hide, but we made it through and proved we had nothing to hide. In the end, the truth wins out and we are delighted today that you have connected with one of the highest quality funds in the US and continue to show growth.” “.
Published by Globes, Israel business news – en.globes.co.il – on July 11, 2023.
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