Israeli-American venture capital firm Merlin Ventures has raised a $75 million second fund focused on investing in growth-stage Israeli cybersecurity companies and accelerating their market entry. The fund will be managed by Merlin Ventures partners and managing directors Shay Michel and Seth Spergel, alongside David Phelps, CEO of the Merlin Group.
Merlin’s first fund managed $53 million, most of which was invested in Israel. Over four years, the fund backed ten companies, six of which have since been acquired. With the launch of the new fund, the firm announced the promotion of Almog Golod, formerly a director, to partner, and business development lead Tav Specter-Levy to operating partner.
Among the advisors and collaborators on the fund are notable figures from the cybersecurity sector, including Torq founder Ofer Smadari; Ofer Ben-Noon, founder of Talon Security (acquired by Palo Alto Networks); Dan Benjamin, founder of Dig Security (also acquired by Palo Alto Networks); and mentalist and entrepreneur Lior Suchard, who joined as a venture partner this past June.
“This is the first fund we’ve raised independently. Since we began managing Merlin’s capital, we’ve wanted a fund with full autonomy," Shay Michel said. "Beyond that, investor demand has been enormous—we may even expand the fund beyond $75 million. There’s strong interest right now in investing in Israeli cyber companies, and many investors feel confident because Merlin is backing us—not just a financial entity.”
Michel noted a rising demand for regulatory licenses among cyber companies, driven by recent attacks on major corporations. “Until last year, we didn’t see many requests for help in this area. But over the past year, demand has soared—these licenses have become a barrier to entry. Even if you’re not working directly with the government, you need licenses that meet government standards, because most Fortune-ranked companies work with the government, which requires third parties to meet the same standards.”
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Since opening its Israel office in January 2021, Merlin Ventures has completed six successful exits, including Talon and Dig Security, both acquired by Palo Alto Networks; InfoSec Global, acquired by KeyFactor; and Veriti, acquired by Check Point Software. The new fund has already made its first two investments, in partnership with U.S. venture firms Lightspeed Venture Partners and Norwest Venture Partners.
“After four years of investing and seeing exits in cybersecurity, we understand that the classic venture capital model needs to evolve—especially in this space,” said Michel. “Israeli entrepreneurs today need stronger starting tools, and our new fund is structured to provide infrastructure, support, and connections that will help startups grow and scale quickly. Our model is closer to that of private equity.”
He added, “We’re seeing a new generation of startups leveraging artificial intelligence to build platforms at a scale that wasn’t previously possible. Realizing that potential is the foundation on which this fund was built.”