V Kela

To Our Limited Partners:
We are pleased to announce the signing of Vector’s 25% minority investment in the Kela
Group (https://www.ke-la.com/).
Founded in 2009 and headquartered in Tel Aviv, the Kela Group provides cybersecurity
and cyber intelligence software and solutions to enterprise and government customers.
The Kela Group operates two businesses: (i) Kela, a developer of automated real-time
darknet monitoring and security solutions to protect large enterprises and governmental
agencies from cyber threats; and (ii) Magen, a provider of cybersecurity solutions that
help government agencies fight national security threats such as terrorism and drug
trafficking. Profitable since inception, the Kela Group is rapidly growing and has not
raised any outside venture capital.
Vector’s investment is structured as a Series A Senior Participating Preferred equity
investment. Factoring in the value of our preference structure, our effective valuation is
8.4x 2017 EBITDA. The investment will be funded with approximately $51M of equity
from Vector Capital V.
2017 was a defining year for the Kela Group - a year in which it has accelerated revenue
growth and built a strong pipeline for 2018 and beyond. The company’s founders are
highly ambitious and recognize that the largest market for its cyber intelligence products
(Kela) is the U.S., a market that the company has struggled to fully penetrate despite
several impressive large enterprise wins. In September 2017, the company was
introduced to Vector through a mutual relationship in Tel Aviv, and a discussion began
around how Vector could utilize its expertise and experience to help the company
penetrate the U.S. market. Over the past seven months, Vector and the company formed
a strong relationship and began building together the foundations for U.S. market
entrance, eventually leading to the signing of the investment. Matt Blodgett will
represent Vector on the company’s Board of Directors.
The Kela Group’s Background:
Founded in 2009 by veterans of Israel’s elite cyber intelligence unit 8200 and its
associated R&D units, the Kela Group is a provider of cybersecurity and cyber
intelligence software and solutions to governments and corporations. The company
operates through two separate business units, Kela and Magen.
Kela is a developer and provider of automated real-time darknet monitoring and a
security platform (RaDark) that provides targeted and actionable cybersecurity
intelligence to corporate and governmental customers. The platform allows
organizations to prepare for cyber-attacks before they happen and to be informed in
real-time if critical information, such as user credentials, was leaked and is in
possession by hackers or other threat actors.
Magen is a provider of cybersecurity solutions and innovative products to law
enforcement and national security agencies. Magen provides government agencies with
tactical and strategic cyber intelligence products that monitor the communications of
potential threat actors. The company’s solutions enable law enforcement and national
security agencies to defend against potential national security threats, including
terrorism and drug trafficking.
Investment Thesis:
The Kela Group is a rapidly growing and profitable provider of cyber intelligence
solutions, founded by a technical and specialized management team, and operates in a
large and growing addressable market. We see a unique opportunity to put Vector’s U.S.
go-to-market expertise and deep experience/network in cybersecurity (SafeNet,
Aladdin, WatchGuard) to work to help the company accelerate its U.S. growth plans.
Key drivers of our investment thesis are:
- Exceptionally technical and specialized leadership and employee
base: The Kela Group was founded by veterans of Israel’s elite cyber intelligence
unit 8200 and maintains an employee base that is predominantly comprised of
engineers with elite technical training from specialized Israeli intelligence units.
- Significant growth opportunity in a large and growing market: The

ever-increasing digitization of information assets has resulted in an increase of
available critical digital data and access/touch points. As a result, Chief
Information Security Officers have been shifting their focus from reactive
security to proactive security. We estimate the current market for the Kela
Group’s products at $2B+ per year.
- Strong market fit and massive pipeline for Magen: The company’s
products are quite differentiated compared to its competition, particularly in
terms of UI/ease of use and rapid speed of deployment. This results in a strong fit
with the largest segment of its addressable markets, where usability is as
important as capability.
- Significant value creation opportunity: The Kela Group has achieved

impressive revenue growth, while showing high levels of profitability, despite
operating with limited go-to-market know-how in Tel Aviv. This is a unique
opportunity to utilize Vector’s expertise to put in place an advanced/modern
corporate and go-to-market structure that will enable the company to profitably
scale and further penetrate the U.S. market.

V Kela

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V Kela

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To Our Limited Partners:

- Significant growth opportunity in a large and growing market: The

- Significant value creation opportunity: The Kela Group has achieved

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