Gili Raanan's VC firm Cyberstarts has helped launch successful startups like Wiz, but faces ethical questions about an industry executive profit-sharing program
Forbes : X: @nicoleperlroth , @alexrkonrad , @alexrkonrad , @alexrkonrad , and @alexrkonrad . LinkedIn: Robert Hansen X: Nicole Perlroth / @nicoleperlroth : This @Forbes piece on Cyberstarts sheds light on the **very** fine line between “pay for play” and bringing in CISOs early to ensure product-market fit. We saw what happened when Pharma insinuated itself in Dr offices. Imho, cybersecurity is too important to follow that MO. Alex Konrad / @alexrkonrad : @Forbes @ForbesTech With @_IainMartin and @iblametom, we @forbes spent months looking into Sunrise, before and after Cyberstarts shut down the pay part in June. We spoke to dozens of sources. Most asked to remain anonymous for fear of retaliation: “You come at the king, you best not miss.” [image] Alex Konrad / @alexrkonrad : Venture capitalist Gili Raanan built a unicorn machine at Cyberstarts, behind Wiz, Fireblocks and others. Then came conflict of interest complaints that forced changes. My latest investigation with @_IainMartin and @iblametom for @forbes: https://www.forbes.com/... Alex Konrad / @alexrkonrad : We spoke to Gili Raanan twice, and CEOs and investors who support him. Raanan and Cyberstarts dispute the Sunrise program was unusual, or that its pay structure, disclosed to employers, created conflicts. But even one supporter noted that, at best, it was “extremely naive.” [image] Alex Konrad / @alexrkonrad : At the core of Cyberstarts' controversy is Sunrise, its adviser program for CISOs to meet with its startups. The program was useful. But it had an unusual setup: advisers could opt in to share in the fund's profits, to the tune of $250,000 per fund 👀 https://www.forbes.com/... [image] LinkedIn: Robert Hansen : I was beginning to wonder if any press would end up covering this after the Calcalistech article broke the initial story. But Forbes did a nice writeup. …
Context & Ripple Effects
Cyberstarts had already built a reputation as a high-performing specialist investor, with earlier coverage reporting a 300% internal rate of return since its 2018 fund launch. Its backing of companies including Wiz and Fireblocks made its model of pairing young security vendors with industry practitioners consequential beyond a conventional VC advisory network.
The new scrutiny centers on whether adviser profit-sharing compromised the independence of CISOs who could influence startup access and adoption. Cyberstarts says arrangements were disclosed to employers and has ended Sunrise's paid component, but the episode puts the governance of investor-led customer-introduction programs under closer examination.
First-order effects
- Cyberstarts has removed the paid element of Sunrise, changing the terms for participating CISOs and limiting a tool the firm used to connect portfolio companies with security buyers.
- Employers of CISOs and the startups seeking their input face more scrutiny over whether advisory roles, compensation, and procurement influence are clearly separated and disclosed.
Second-order effects
- Cybersecurity investors and startups using practitioner-adviser networks may need to formalize disclosures and employer approvals to distinguish product feedback from compensated customer access.
- Portfolio companies lose a potentially powerful channel for early buyer engagement, increasing the importance of proving product-market fit through customer relationships that do not create perceived conflicts.
Third-order effects
- If similar programs draw sustained scrutiny, cybersecurity go-to-market models may shift toward clearer boundaries between investor networks, practitioner advice, and enterprise purchasing decisions.
- The case highlights a broader governance test for specialist VC: concentrated access to influential operators can accelerate startups, but its legitimacy depends on transparent incentives and independent buyer judgment.
The trend: Specialist investors are being pressed to show that operator networks used to accelerate startups do not blur into paid influence over enterprise technology decisions.