LG acquiring Israeli vehicle cybersecurity startup Cybellum for at least $140 million
The Korean electronics giant will initially purchase a 64% stake in the risk assessment solution provider
Cybellum, founded in 2016, had raised just $15 million in total to date from investors including RSBG Ventures, Blumberg Capital, and Target Global.
Cybellum was founded by CEO Slava Bronfman and CTO Michael Engstler, who both served in the elite Unit 81 of the Israeli military's intelligence. Cybellum provides automotive OEMs and suppliers with a solution to identify and remediate security risks at scale, throughout the entire vehicle life cycle. Cybellum’s agentless solution scans embedded software components without needing access to their source code, exposing all cyber vulnerabilities. Manufacturers can then take immediate actions and proactively eliminate any cyber risk in the development and production process before any harm is done, while continuously monitoring for emerging threats impacting vehicles on the road.
Cybellum, which has partnerships with the likes of Jaguar and Nissan, employs 50 people, 35 of which are based at its R&D center in Tel Aviv.
Bronfman told Calcalist that the connection with LG was made long ago. "LG is known for its consumer products, but it is also one of the biggest players in the global automotive industry which is based upon a supply chain. Auto manufacturers are ultimately just integrators who combine all the parts from the supplies and LG is one of the biggest suppliers of parts for auto systems.
"Over a year ago LG realized that most of their parts are software-based and that in order to remain relevant they also need to provide cybersecurity solutions. So they started a scouting process around the world looking for companies to invest in or purchase. As part of that process they reached us and after quite a few discussions decided to progress from an investment into making a full acquisition. We reached this structure that on the one hand, they will be acquiring us, but on the other hand, we will remain a completely independent company and brand and they will even still remain our client. This is their first acquisition in Israel and in cybersecurity in general and is part of a strategic move."
Why did you accept this deal now? You seem to only be at the beginning of your road.
"Correct and that is why this deal is being done in stages. However, ultimately we are in a traditional sector with giant corporations. We don't have small clients. They are all companies worth billions of dollars. We believe that in a market like this joining forces with a giant will accelerate processes for us. In addition, this is also an opportunity to provide an excellent return for our shareholders and that is also a factor."
What do the next stages of the deal depend on?
"Time. We understand that we want to grow and the company will be reevaluated at every stage. We didn't set milestones because our growth depends on the growth of the market. The company currently sells in the millions. We don't need milestones in which we will have to prove our technology."
One of Cybellum’s most advanced solutions to protect vehicles from cybersecurity threats is its Cyber Digital Twins platform. Cyber Digital Twins creates a detailed representation of a vehicle’s software components without accessing the source code and automatically exposes any risks that could potentially be exploited. The platform relies on real-time threat intelligence feed to check for vulnerabilities and delivers a full assessment of those vulnerabilities as well as providing recommended solutions.
"Our product is very basic," explained Bronfman. "We take a component, for example, the brakes, and scan its software in order to simulate it. If the manufacturer wants to test things like the component's weaknesses, whether it meets regulation and so on, we will do those checks using the simulation."
Founded in 2013, LG’s VS Company recorded sales of $5.18 billion in 2020, a 6.1% increase over 2019. Through its investment in vehicle cybersecurity, LG is aiming to increase the competitiveness of its infotainment systems, electric vehicle powertrains, and vehicle lighting capabilities, the three pillars of the automotive component industry.
"The global crisis in the hardware sector emphasized the importance of this deal that provides validity for remote secure software updates for the auto industry by Cybellum," said Yodfat Harel Buchris, Managing Director at Blumberg Capital, which was the first VC to invest in the company.