AT&T, Accenture, Nokia Invest $23 Million in Cybersecurity Startup-Creator

February 23, 2016, 12:30 PM UTC
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Team8, a cybersecurity startup based in Israel, said Tuesday it raised $23 million. The Series B round of financing includes investors AT&T (T), Accenture (ACN), Nokia (NOK), Japanese conglomerate Mitsui, and Singaporean government-owned Temasek.

The company raised $18 million a year ago, bringing its present fundraising total to $41 million. The latest set of financiers join existing investors Cisco (CSCO), Alcatel-Lucent (ALU), and venture capital firms Bessemer Venture Partners, Marker, and Innovation Endeavors, co-founded by Alphabet (GOOG) executive chairman Eric Schmidt.

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Nadav Zafrir, co-founder, CEO, and former head of Israel’s intelligence unit 8200, the country’s National Security Agency equivalent, describes his company as a cybersecurity “foundry,” meaning that its purpose is to churn out startups and founders of its own. He tells Fortune that Team8 has plans to launch five companies in five years.

“We don’t invest in cybersecurity companies,” he says. “We actually build them.”

Team8 has hired 130 people in the past year, Zafrir says. Founded in 2014, the company has already launched one company.

Illusive Networks, its sole progeny (so far), has itself raised $27 million in two rounds of funding from investors that include Team8, New Enterprise Associates, and the venture capital arm of Citi Group (C). The firm deploys “deception” technology in corporate IT environments—bogus bait like network administrator credentials, for example—in order to fool and ensnare hackers.

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Team8 plans to launch two more companies this year, Zafrir says. The first should debut in about three months and is focused on protecting industrial firm’s networks, such as those of utilities and oil and gas companies. The second should be officially announced in six months and aims to provide data breach cleanup services to businesses victimized by hacks.

“Cyberattacks are evolving and are no longer only a CIO, CSO, or IT department issue,” said John Donovan, chief strategy officer and president of AT&T’s Technology and Operations group, in a statement. “This strategic investment is key to not merely iterating, but innovating against today’s highly adaptive attacker.”

Future plans for Team8 include the launches of two more companies focused on some mix of cloud, mobile, or Internet of things, Zafrir says. He said he expects the latest set of investors to provide Team8 with expertise and engineering skills, as well as insight toward expanding into global markets like Asia.

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