Karamba Security Snags $10M from WTI, Contemplates Acquisition Targets
Karamba Security, an automotive cybersecurity startup based in Hod Hasharon, Israel, and Bloomfield Hills, MI, announced this week that it has closed on $10 million in financing from Silicon Valley’s Western Technology Investment. That brings the total amount raised to $27 million since the company’s 2016 inception.
David Barzilai, Karamba’s co-founder and executive chairman, says the deal with WTI is a venture loan rather than a traditional investment.
“WTI is a firm that grants loans as long as they trust management, believe the space is promising, and the company is disruptive,” he says. “They gave us $10 million without any conditions because they believe in our business.”
Jay Cohan, investment partner at WTI, was quoted in a prepared statement as saying, “Our engagement with Karamba Security represents an opportunity to be involved in a leading cybersecurity company with a promising history of engaging a wide variety of industry players toward building a platform for safer autonomous driving.”
Karamba, whose customers are automotive manufacturers and suppliers, blocks outside hacking attempts on connected and autonomous vehicles. The company’s software seals off access to externally connected electronic control units (ECUs), where hackers are likely to invade, to prevent breaches. (Think of ECUs as ports around the car that interface with the outside world, such as a Wi-Fi or cellular phone connection.) If the car tries to run a piece of suspicious code that doesn’t conform to the manufacturer’s settings, Karamba’s technology aims to prevent it. The software can be installed before or after the car is sold, the company says.
According to Barzilai, Karamba’s hack-blocking products can be integrated into a wide variety of automotive platforms at both the chip and operating system level. The company has already worked with 17 auto manufacturers and suppliers to test its product.
This week, Karamba presented a paper with Denso, a Japanese parts supplier, at the annual SAE World Congress in Detroit. In it, Denso describes its efforts to integrate and evaluate Karamba’s technology. In a free preview version of the paper, Denso states that Karamba’s software “can provide [automotive hacking] protection with zero false positives while meeting automotive constraints.”
“Most companies in this industry are secretive, but Denso was kind enough to talk about our product,” Barzilai says.
As for what Karamba will do with WTI’s venture loan, Barzilai says the company doesn’t necessarily have to spend it at all. “The good thing about this credit line is it’s waiting,” he explains. “It’s not on the balance sheet until we take it, but it can be used anytime for any reason at management’s discretion.”
He says Karamba already had enough operating capital for the next couple of years, but the 41-person company wanted to be able to acquire other cybersecurity startups with complementary innovations.
“We realized we were growing fast and may need to grow faster,” Barzilai says. “We don’t have any specific acquisition targets now, but if the opportunity introduces itself, we want to be able to realize it.”
Last month, Karamba also announced some personnel news. Guy Sagy, a longtime former intelligence officer doing cybersecurity work for Israel’s version of the NSA, has come on board as Karamba’s chief technical officer. Co-founder Assaf Harel has been appointed Karamba’s chief scientist, and former HP executive Amir Einav has been named vice president of marketing. In addition, the company added Paul Mascarenas, Ford’s former chief technical officer, and Bruce Coventry, former chairman of TowerSec, to its technical advisory board.