The Strategist

PayPal acquires CyActive for $60M


03/11/2015 - 14:13



PayPal adds Israeli cyber security startup CyActive to its kitty. With CyActives predictive analytics, it hopes to protect and create a safe environment free from current and future cyber attacks.Sounds too good to be true? Well PayPal bet $60M on it.



It is so refreshing to hear that a service that is widely used worldwide improves its security features. Somehow the news tastes even sweeter, when we hear that this service involves and revolves around money. After all, our moolah is pretty dear to us.

With all the security related issues that have been hitting the net, PayPal has gone ahead and acquired a security firm in Israel. Although, in Tel Aviv, PayPal has its own Fraud and Risk Detection Centre, it has nevertheless gone and acquired this startup. This is because CyActive’s "specializes in technology that can predict how malware will develop."

Will this mean a Minority Report  in actuality? Well, not literally but almost literally. CyActive’s algorithms depend on predictive analytics - instead of a person’s pre-cognition to detect and neutralize cyber threats.  

CyActive is now tasked to put in place its technical know-how so as to protect PayPal from potential current and future cyber-attacks.

Tel Aviv has a strong and thriving technical community, of which many specialize in Internet security.
The online payment processor is far from being the first company to expand into Israel by acquiring startups. Israel, especially Tel Aviv, has a thriving tech community, many of which specialize  in cybersecurity.

Founded in 2013, CyActive’s technology is lightweight yet extremely effective. No wonder Siemen’s Venture Capital unit invested heavily in it. Ralf Schnell, CEO, of Siemen’s Venture Capital explained “We see broad potential across major industries and are particularly excited by its approach to securing industrial and utilities assets. CyActive’s founders are leaders in the field and the company’s unprecedented predictive cyber security technology turns the economic equation in favor of the defender.” 

CyActive’s has developed bio-inspired algorithms which can consistently forecast the development pattern of future malware. These also make use of a very fundamental understanding of the mind of a black hat hacking process. The result is surprisingly effective in its protection of endpoint devices.
What is also of note is that CyActive’s algorithms are not CPU intensive, and its memory requirements is pretty low. With a low update cycle, CyActive’s products are a boon for securing critical infrastructure that cannot at any time be offline.

This is not the first time that PayPal has acquired a security company based out of Israel. It snapped up Fraud Science – another Israeli tech startup which dealt in cyber security – for $170 million in 2008.
Although PayPal was not too forthcoming as to what was the cost of this acquisition, but basing on earlier reports it was stated to be around $60 million.

References:
http://www.engadget.com/2015/03/11/paypal-security-center-israel/

http://www.techrepublic.com/article/how-israel-is-rewriting-the-future-of-cybersecurity-and-creating-the-next-silicon-valley/
http://www.wsj.com/articles/tech-hub-tel-aviv-scrambles-plans-1406068545
http://www.jvpvc.com/news/vc-unit-of-siemens-announces-investment-in-cyactive





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