Latest / Israel Tech Daily / Capitolis buys eSecLending for $200 million, Cato's $100 million secondary, and Reco raises $50 million

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Capitolis buys eSecLending for $200 million, Cato's $100 million secondary, and Reco raises $50 million · Israel Tech Daily

• 0:00
  Tamar: An Israeli fintech is buying a twenty-six year old American lending firm for two hundred million dollars in cash.
• 0:07
  Eli: And at Cato Networks, hundreds of employees have just turned shares into cash. Again.
• 0:18
  Tamar: Good morning, it's Wednesday, the thirtieth of September. I'm Tamar.
• 0:22
  Eli: And I'm Eli. Today: Capitolis makes a two hundred million dollar acquisition, Cato completes a hundred million dollar secondary, and new details on how OpenWeb ended up in court.
• 0:35
  Tamar: Capitolis, the Israeli fintech founded in 2017, has agreed to acquire eSecLending, an American securities lending company, for two hundred million dollars in cash. Globes, CTech and TheMarker all report the deal, which the company announced on Tuesday.
• 0:52
  Eli: eSecLending works with pension funds, insurers and asset managers, and lends their securities to major global banks. CTech says it has been operating for twenty-six years, has offices in Boston and other American cities, and employs a hundred and twenty people. Capitolis itself has about two hundred.
• 1:11
  Tamar: The sellers are the private equity firm Parthenon Capital and eSecLending's own management. And Parthenon isn't walking away. As part of the transaction, it's investing in Capitolis.
• 1:23
  Eli: TheMarker notes this is the fourth acquisition Capitolis has made in five years. Its platform helps banks use their capital more efficiently, and the company says securities lending complements that. Founder and CEO Gil Mandelzis called it a transformational acquisition.
• 1:39
  Tamar: How much Capitolis has raised depends on who you read. CTech says about three hundred million dollars, Geektime about three hundred and fifty. The deal still needs regulatory and antitrust approval, and eSecLending's European arm isn't included.
• 1:55
  Tamar: Next, Cato Networks. Globes reports, citing sources, that the cybersecurity company recently completed a secondary deal worth about one hundred million dollars. Hundreds of employees and existing investors sold part of their holdings.
• 2:09
  Eli: A secondary is different from a funding round. The money doesn't go to the company, it goes to the people selling their shares. So staff can cash in some of what they've earned while Cato stays private. Globes says the valuation of this deal isn't known.
• 2:23
  Tamar: And it's the second time in just over a year. In the summer of 2025, Cato raised what grew to four hundred and nine million dollars, at a valuation of four point eight billion. That included a secondary of about a hundred and twenty million, in which around fourteen hundred current and former employees sold shares.
• 2:42
  Eli: Cato was founded in 2015 by Shlomo Kramer and Gur Shatz. Globes says its annual recurring revenue has passed four hundred and fifteen million dollars, up forty-two percent in a year, and it has nineteen hundred employees, about half of them in Israel.
• 2:57
  Tamar: The company told Globes it won't comment on specific deals, but that it wants employees to share in the value they create.
• 3:03
  Tamar: To funding. Reco, a Tel Aviv company that secures AI agents inside large organizations, has raised fifty million dollars. Globes and Geektime report a strategic investment from AT&T Ventures, joined by the funds Forestay and Quadrille Capital. One outlet, Israel Defense, puts the round at fifty-five million.
• 3:25
  Eli: AT&T is a customer that became an investor. Globes puts Reco's total funding at one hundred and thirty-five million dollars. The product maps which AI agents are active in a company, which permissions they use, and which data and systems they can reach.
• 3:41
  Tamar: Co-founder Gal Nakash told Geektime that at one customer, Reco found forty-two thousand agents, some of them exposed to the internet. The newest layer of the product includes a kill switch, which disconnects an agent the moment it goes beyond its original purpose.
• 3:56
  Tamar: Defense tech now. Protego Ventures, which presents itself as the first and largest dedicated defense tech venture firm in Israel, has closed its debut fund at one hundred and twenty-five million dollars. TechCrunch had the story first.
• 4:11
  Eli: It's led by Lital Leshem and Lee Moser, and it invests between five and fifteen million dollars per company. The target was actually one hundred and fifty million. TechCrunch reports they stopped short on purpose. Their first portfolio company, the drone maker XTEND, went public on the New York Stock Exchange this month, and in a smaller fund, one big win counts for more.
• 4:32
  Tamar: Ynetnews adds that Protego led XTEND's seventy million dollar Series B round. And Leshem told TechCrunch a second fund is planned for the first quarter of 2027, with a broader scope that includes American defense tech companies.
• 4:46
  Tamar: And an update on OpenWeb. On Monday we told you the former unicorn had filed for insolvency. Today, from Geektime's reporting, we know more about how it got there.
• 4:56
  Eli: In its court filing, as Geektime describes it, OpenWeb says AI tools have cut traffic to its customers' websites. It says it was in the middle of a recovery plan and expecting fourteen million dollars from its investors. And it alleges that its lender, Mars Growth Capital, demanded immediate repayment of twenty million dollars and took control of company bank accounts. Geektime's report doesn't include a response from Mars.
• 5:21
  Tamar: In his letter to employees, CEO Jim Daly wrote that the board had decided to sell the company, and had entered exclusive talks with a potential buyer, before that process was paused. The company says it's still operating, and that all employees have been paid so far.
• 5:36
  Eli: Now the quick round-up.
• 5:38
  Tamar: Smart Shooter, from Kibbutz Yagur, has won a three-year US government contract for its SMASH counter-drone systems, which help a soldier hit a small drone with a standard rifle. CTech reports the ceiling is one hundred and fifty million dollars, and stresses that's a maximum, not a guaranteed purchase.
• 5:55
  Eli: Rig Security has come out of stealth with a twelve million dollar seed round, led by Ten Eleven Ventures and Brightmind Partners. CTech says founder Guy Kozliner came from Wiz, and Wiz co-founder Ami Luttwak is among the investors. Rig's platform separates what an AI agent does from what the employee behind it does.
• 6:14
  Tamar: Meitav Trade says an outside party exploited a flaw in a vendor's interface and retrieved customers' personal details, including names, ID numbers and bank account numbers. CTech reports the company says customer funds and trading systems were not compromised. The site Escudo Digital says the shares fell about five percent on Tuesday.
• 6:34
  Eli: And CTech reports that the insurer Phoenix has added nearly one billion dollars of exposure to Israel's chip sector in under two and a half months, concentrated in the equipment makers Nova and Camtek. Its total position in the sector is now roughly seven billion shekels.
• 6:52
  Tamar: One thing to watch. Capitolis still needs regulatory and antitrust clearance, and that decides when eSecLending actually becomes part of the company.
• 7:01
  Eli: And OpenWeb, at the Tel Aviv District Court. The question is whether a sale comes back on the table. We'll keep following it.
• 7:08
  Tamar: That's Israel Tech Daily for today. If this was useful, follow the show wherever you're listening, and read our startup profiles at Startup to Follow dot com.
• 7:17
  Eli: Thanks for listening. See you tomorrow morning.