The Israeli cyberstartup with Sam Altman as an angel

Two years ago, at the age of 36, Matan Derman, a promising young officer in the IDF 8200 signals intelligence unit, was released from the army with the rank of lieutenant colonel. Derman served in the Intelligence Corps for eighteen years, at the end of which he headed one of the most prestigious sections responsible for covert operations about which it is better to keep quiet.

Many of those he commanded or served alongside him have long since been discharged, founded companies and become billionaires. From the tent of the Givati ​​Brigade from which he trained as a recruit for the army’s prestigious Talpiot program, founders and senior executives of companies worth billions, such as Axonius, Pagaya and Cato Networks, have emerged. From the section he commanded came Assaf Rappaport and Yinon Costica, who were among the founders of Wiz, and who appeared on Forbes’ list of billionaires last month; Ohad Bobrov, co-founder of Talon Cyber ​​Security, which was sold for $500 million; and Dan Amiga, co-founder of Island, which received a $3 billion valuation last week.

However, Derman (as he is known to all his friends, rather than by his given name Matan) preferred to continue his military career, for which he received the Israel Defense Prize in 2022. “Over the years, offers and opportunities arose . to join companies,” he told “Globes,” but the first-hand contact with the technology core and the direct connection between that and the achievements for the country’s security outweighed any financial considerations, he says. Derman knew that at some point the right opportunity would present itself, but he didn’t know exactly when it would be.

Even when he was released from the army, he did not rush to found a company and raise millions as his peers had done, but chose to continue his studies. He applied for an MBA at Harvard, MIT, and Stanford, and was accepted by all three, but decided to go to Stanford because of its entrepreneurship track, where students are encouraged to start companies. From this emerged giants like Google and Airbnb. And then it happened: Derman teamed up with one of his former soldiers, Tomer Avni, who had been the head of a research section in 8200, and who was also studying at a prestigious American university, namely Harvard.

The pair have kept in touch since their army days and have seen the AI ​​revolution take shape up close. A few months after Derman was discharged, OpenAI introduced its intelligent chat engine ChatGPT, and his studies at Stanford put him in close contact with decision makers at giant companies who decided that, for now, generative AI was a great trick, but one far from the core of the company.

Derman never imagined that in a few months he would be at the helm of a new company, Apex, which secures the use of ChatGPT, and should reduce the opposition of managers to its use. He also did not think that this year he would raise $7 million from big names like Sequoia Capital and Index Ventures, and from Clément Delangue, co-founder and CEO of Hugging Face CEO, and of course Sam Altman, founder and CEO of OpenAI. the latter as private investors. As far as is known, this is the only AI cybersecurity company in which Altman is invested. He continues his private career as an angel investor while running OpenAi, and apparently with no connection to the company.

Since 2010. Altman is estimated to have invested in more than 400 companies, about 300 of them personally and more than 100 through the startup accelerator Y Combinator, which he ran, and Apollo, which was run by his brother Max Altman. As far as is known, Sam Altman had never directly invested in an Israeli startup managed from Israel before.

Different backgrounds

Apex founders Derman (38) and Avni (30) come from very different places. Derman, who is CEO of the company, grew up in Re’ut. In his youth he was the Israeli national long-distance swimming champion in his age group, but an injury on the basketball court cut short his sports career and led him to join extracurricular science groups, from which the path was short Talpiot Program.

Avni, who is a CPO, was born into a religious-nationalist family in Shoham. He studied at Kiryat Herzog yeshiva in Bnei Brak, moved with his family to the United States during his high school years, and upon his return to Israel studied mathematics at Bar Ilan University before being drafted into the IDF’s Military Intelligence Research Division . During his IDF service he lost his religion, and after his discharge he worked for a time as an investment manager at the venture capital firm Blumberg Capital, where he managed investments in cyber security companies such as Hunters and Medigate. As mentioned, he partnered with Derman in the company while studying for a second degree at Harvard, and the two of them were clear that the company they would form would be in cybersecurity.

“At the end of 2022, ChatGPT comes out, and everyone is talking about generative AI, and it pretty much explodes,” says Derman. “There was a feeling that we were on the brink of a new era in which giant companies could emerge, as happened at the beginning of the Internet and cloud computing. On the other hand, we saw up close how American companies blocked the use of ChatGPT and the tool code completion GitHub Copilot They feared that sensitive information would be leaked and that incorrect information would infiltrate critical decision-making. biased models, so there is a basic drawback to using AI models.”

Hacking the chatbot

The problem is not only the fear of information being leaked to OpenAI servers or the use of models that violate intellectual property rights. Hackers have already learned how to exploit AI models for their own purposes through what is known as “jailbreaking”, that is, convincing the chatbot that the user is the company’s CFO and causing it to reveal sensitive information from the company’s servers company Others feed the model during training with malicious information or links to malicious sites.

Apex’s solution is in use at several of the top 200 companies in the US. U.S., and Apex expects to record an annual revenue rate of $250,000 in the second quarter. The company was founded only ten months ago. Its founders aim to turn it into an AI cyber giant. It is inspired by Wiz, which grew thanks to a system that facilitates the rapid connection of applications to the cloud, being indifferent to the type of application, and able to accommodate any type of connection. Apex can deal with most closed models: Claude from Anthropic; Gemini from Google; and most OpenAi models. The company promises that it will soon be able to work with any open model, such as Meta and Mistral, and manage regulatory compliance processes and company policies for any connected model and any use made of it. He believes that he will finally be able to deal with the problem of hallucinations and neutralize wrong and biased information.

The pair came to Altman after receiving commitments from Sequoia Capital and Index Ventures, two of Wiz’s biggest investors. “We looked for a connection with him and we got it,” says Derman. “We saw that the AI ​​market was heating up, and we wanted the best coaches on our bench. When we met him, the AI ​​and security liability market was starting to get talked about, and the top AI companies need big cybersecurity companies to safe use.:

Altman is not on Apex’s board of directors, but instead serves as an angel investor that Derman and Avni consult from time to time. “When we meet with a client and tell them we’re backed by Sequoia and Altman, it’s a different conversation,” says Derman.

Apex may be a pioneer in its field and connected to high-quality investors, but it is not alone. Just yesterday, another Israeli cybersecurity company specializing in protecting AI models, DeepKeep, announced that it has raised $10 million from Canadian-Israeli venture capital firm Awz Ventures. Meanwhile, cloud providers like Microsoft and Amazon are trying to develop workarounds, and cybersecurity firms like CrowdStrike and Palo Alto Networks have entered the field. Derman, however, is convinced that innovation will come from startups fully dedicated to it. “AI companies are concerned about computing and processing power, and this is not their main concern,” he says.

Posted by Globes, Israel business news – en.globes.co.il – on May 2, 2024.

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