Zscalera cloud security company based in San Jose, California, has acquired cybersecurity startup Avalor 26 months after its founding, According to reports for $310 million in cash and equity.
In a press release announcing News, Zscaler founder and CEO Jay Chaudhry said the deal will expand Zscaler’s platform with capabilities that include improved security incident reporting, incident mitigation, asset discovery, data classification, security policy creation and more.
“AI is only as good as the underlying data, and many solutions lack the additional context and knowledge from data sources across the enterprise to truly leverage security-specific AI models,” Chaudhry said in a press release. “Zscaler operates the world’s largest security cloud with the most relevant data to train large security-specific language models, and by acquiring Avalor, we can more effectively identify vulnerabilities while predicting and preventing breaches.”
Raanan Raz co-founded Avalor with Kfir Tishbi, who previously led the engineering team at Datorama, a marketing analytics company acquired by Salesforce in 2018. Raz and Tishbi worked together at Datorama, both before and after the acquisition of Salesforce.
Avalor acts as a source of truth for elements, controls, identities, vulnerabilities, bugs and other cyber data points, enabling security teams to aggregate, normalize, unfold and track risk data from discovery to remediation.
It’s not a unique idea. A number of startups out there are facing the same problem, such as Securiti and Dig Security. But what sets Avalor apart is its ability to handle data from almost any source in any format, and its unique set of vulnerability risk management and prioritization tools.
Prior to the Zscaler acquisition, Avalor managed to secure $30 million from investors including TCV, Salesforce Ventures, Jibe Ventures and Cyberstarts. And Raz sees Zscaler taking the business — and its ~80-person team spread across the US and Israel — further.
“[With Zscaler, ] we have immediate access to a set of resources that would have taken us years to develop organically — 7,000 customers, 4,200 channel partners worldwide, near-ubiquitous customer awareness, and the validation of a $2 billion business behind us,” Raz wrote in a Position on Avalor’s blog posted Thursday morning. “We will continue to operate independently as an integrated Avalor team and will be helped by all the tailwinds of the amazing Zscaler resources.”
Avalor is Zscaler’s third acquisition after Canonic, a startup focused on protecting against cyberattacks targeting software-as-a-service products, and Trustdome, a cloud infrastructure rights platform. Founded in 2007 by Chaudhry and K. Kailash, Zscaler — which went public in March 2018 — has about 7,000 employees and a market capitalization of about $30 billion.
As Crunchbase’s Chris Metinko famous earlier today, the acquisition of Zscaler — along with others in the cybersecurity space — could help spark activity in a slow-to-stagnant cyber M&A market. Last year saw just 66 M&A deals involving VC-backed cyber startups, per Crunchbase — down 26% from 2022 (which saw 89 such deals) and down more than 50% from 2021 (139 deals).
So far in 2024, there have been 18 cybersecurity-related mergers and acquisitions, with particularly notable moves coming from Wiz, SentinelOne, and CrowdStrike.
