This Israeli cybersecurity startup is less than a year old. Here’s how it got a $33 million preemptive term sheet from Craft Ventures.

• Daylight just closed a $33 million Series A round led by David Sacks’ Craft Ventures.
• Founded by vets of Israel’s elite intel unit, Daylight is an AI-driven managed detection and response platform.
• Funding for Israeli security startups nearly doubled last year compared to 2023.

AI is fueling a surge in cyberattacks. Startups, especially in Israel, are rushing to use their own AI to stay one step ahead of the bad guys.

The latest is Tel Aviv-based Daylight, which closed a $33 million Series A round led by Craft Ventures, the San Francisco firm cofounded by PayPal and SpaceX backer David Sacks.

The funding comes as Google is attempting to close its $32 billion acquisition of Wiz, another Israeli-founded security firm, in what could be one of the largest cybersecurity deals ever.

Funding for Israeli security startups nearly doubled last year compared to 2023, reaching a level equal to 40% of the entire US cybersecurity funding market, according to data from Startup Nation Central.

Other investors in Daylight’s round include Bain Capital Ventures, Maple VC, and a who’s who of Israeli cybersecurity founders, including Wiz’s Assaf Rappaport, Torq’s Ofer Smadari, and Armis’s Yevgeny Dibrov. Daylight declined to share the valuation of the round.

When Daylight launched at the beginning of the year, cofounders Hagai Shapira and Eldad Rodich didn’t set out to raise another round of funding so soon. They’d just closed a seed round, hired their first engineers, and shipped their first product, an AI-driven managed detection and response platform.

Then Craft Ventures reached out with an offer too good to resist.

“You don’t want to take more money than you can handle,” Shapira told Business Insider on a Zoom call from Tel Aviv. “But we’re proving every day that we deserve that trust of our investors and, of course, the trust of our customers.”

Like Wiz’s founders, Shapira and Rodich are veterans of Unit 8200, Israel’s elite intelligence unit that has produced some of the country’s most successful tech entrepreneurs.

Vega, another young Israeli cybersecurity company founded by 8200 veterans, announced $65 million in funding at a valuation of $400 million in September.

In the first quarter of this year, cyber attacks increased by nearly 50% per organization, according to Check Point Research. The prevalence of attacks makes it a good time to be in the cybersecurity business, said Kevin Gabura, a principal at Craft Ventures.

“AI has had a really disruptive impact on cybersecurity, and so that’s why you’re seeing a lot of new companies actually being built here,” said Gabura. “You’ve got all these AI agents that are going after different aspects of cybersecurity operations.”

Gabura said he was confident enough to offer Daylight a preemptive term sheet based on its early traction; The company already has dozens of clients across the US and Europe, including The Motley Fool, Cresta, and McKinsey Investment Office.

“They had shipped a ton of product in just the short time that they’ve been around,” said Gabura. We spent a lot of time talking to people who have used the product, and the feedback was really strong.”