TEL AVIV Israeli startup Karamba Security, a provider of cybersecurity for connected and self-driving cars, said on Tuesday it raised $12 million, attracting first-time investment in Israel from Washington-based cyber-focused Paladin Capital.
The latest investment brings Karamba's total fundraising to $17 million, with existing investors YL Ventures of California and Detroit-based Fontinalis Partners leading the round, followed by GlenRock Israel. Other new investors are Liberty Mutual Strategic Ventures, Sumitomo Corp's Presidio Ventures and security management provider Asgent (4288.T).
The global cybersecurity market for cars was estimated by Mordor Intelligence to grow to $1.1 billion by 2020 from $17 million in 2015.
Karamba said its software protects cars based on their factory settings, blocking hacking attempts as they deviate from these settings and before they infiltrate the car.
Paladin, with $1 billion in four funds, said this was its first investment in automotive security.
"We see this notion of Karamba trying to prevent attacks as substantial progress on what exists today to detect attacks," Paladin managing director Kenneth Minihan told Reuters.
Minihan, a retired Air Force lieutenant general and former director of the U.S. National Security Agency, said ransomware attacks such as those that occurred over the weekend would not be relevant to automobiles, which operate in their own network.
But hackers may "attempt to disrupt data feeds that are telling you what's happening around other cars," he said.
Karamba said network security technology based on statistical modeling is prone to false alarms that could risk lives if applied to cars. For example, brakes could fail if a legitimate command is mistakenly identified as malicious and blocked.
(Reporting by Tova Cohen, editing by Pritha Sarkar)