Gili Raanan on Seed Investing, Founder Selection and Cyberstarts’ Sunrise Process

Gili Raanan tells Harry Stebbings that an investor should stay hungry rather than be satisfied with past successes. He also says that his portfolio companies can be sold at the right price: he sees himself as an investor, not a collector.

Raanan grew up in a small Israeli town. He describes himself as a bright but sometimes lazy student and recalls being drawn to a Commodore 64 because it could perform repetitive tasks without tiring. He sees a constructive form of laziness as an incentive to seek efficiency and work with complementary people.

He distinguishes a passive investor from an early-stage company builder. In his view, a founder trying to build a large business benefits from an investor who can become a trusted first call when important decisions arise. This is his view of the service his own firm seeks to provide.

Sequoia had backed his first startup in 1997, a web application firewall company later acquired by IBM. After founding another business and moving back to Israel, he joined Sequoia in 2009. He recalls Michael Moritz asking why he had made choices, rather than simply reviewing his accomplishments.

Raanan now asks founders about their motivations. Whether someone is driven more by fame or fortune is less important to him than understanding the answer: he believes it helps him anticipate behavior and become a better partner.

He compares joining Sequoia to playing for a famous football club. Its brand, he argues, attracts entrepreneurs, executives and other investors, making the work of building a company easier. He also says its culture taught him to remain dissatisfied enough to keep improving.

Stebbings questions whether relentless dissatisfaction is a healthy way to live and suggests celebrating wins. Raanan disagrees: he sees self-questioning as protection against complacency. His comments about a possible future Wiz public offering and valuation are hypothetical, not a reported transaction.

Raanan says his seed investment approach shifted from analyzing markets, technology and product to assessing people. Plans can change quickly, he argues, while the founding team is comparatively stable. Stebbings challenges whether young founders should nevertheless be expected to understand their markets.

At Cyberstarts, Raanan says an initial meeting can focus on a team’s lives and motivations rather than its product. If founders have no idea, he believes the firm can help them identify a meaningful customer problem. This approach reflects Cyberstarts’ own model and commercial interests.

He listens for signs of unusual excellence and for experiences of overcoming difficulty. Stebbings asks how an investor can expect people to revisit painful memories in a fundraising conversation. Raanan says he tries to create comfort, share his own failures and build a relationship before discussing an investment.

Raanan shares that his daughter died five years earlier and says that experience changed his life. He describes speaking openly about his own difficulties as part of showing founders that he wants a genuine partnership.

On founder expertise, he does not require people to be insiders in the market they enter. He looks for energy and enthusiasm, and describes founders with technical expertise from another field working with Cyberstarts to identify security problems.

Raanan recalls investing in the Adallom team despite disliking its original idea. He says customer conversations pointed them toward cloud security; Adallom was later acquired by Microsoft and members of the team went on to start Wiz. His account is an example from his investment history, not proof that domain knowledge is unnecessary in every case.

He says the Cyberstarts “Sunrise” process addresses market timing after the initial team investment. Rather than pitch a fixed product, founders speak with potential customers about which problem they would most want a substantial engineering effort to solve.

Raanan frames the question as offering a team and a hypothetical $100 million of engineering spending over three years to solve one pain point. He says the formulation helps customers prioritize. His claim that this solves timing risk is part of his thesis; customer interviews cannot guarantee future demand or spending.

He says teams typically conduct 60 to 70 initial conversations, develop a solution thesis, and return for another 60 to 70 conversations. If customers respond positively, the team builds and later asks them to try the product. These counts describe the firm’s reported process.

Cyberstarts partners are not necessarily in each meeting, but review and rate the discussions with founders and meet weekly. The process asks difficult questions early: why would a customer not buy from an incumbent, how should a solution be priced, and what technical evaluation would convince a buyer?

Raanan says confronting objections before building can be emotionally difficult but may speed up a more focused business. He reports that, of 17 portfolio companies that completed Sunrise and raised Series A, seven were unicorns, one a decacorn and three had been acquired, with four other companies still in the process. These are his portfolio figures at the time, not independently verified returns or proof of causation.

He says the firm’s reputation makes fundraising and hiring easier, but that customer discovery and company building remain hard. Each Sunrise process exposes founders and investors to repeated reasons why a product might fail or a buyer might decline.

Asked how he recovers from setbacks, Raanan says his drive comes naturally and that losing it would be a signal to retire. Stebbings describes his own experience as more deliberate and difficult. Their accounts illustrate different ways of coping, not a single recipe for resilience.

When an investment disappoints, Raanan revisits what he misunderstood about the team. He tries to learn without repeating mistakes and to spend more time on the activities his firm performs well.

He says Cyberstarts is strongest at selecting teams and pursuing important companies, while less confident about predicting market trends or matching founders with one another. He values learning and preparation at other firms but deliberately approaches seed meetings without a fixed thesis.

Raanan argues that price can become a trap if an investor misses an exceptional company for being expensive. He tells founders that choosing a high-value partner can also cost more equity. He says Cyberstarts has not tested whether its reputation lets it demand materially better pricing.

For enterprise and cybersecurity software, he estimates that roughly $5 million to $6 million may be needed to build a team and product and win a few early deals. This is his experience-based estimate for the sector and period, not a universal funding requirement.

Speed alone is not the goal. In cybersecurity, Raanan says a later entrant may benefit from more information and a better product. He prioritizes understanding the pain point, finding the buyer, demonstrating value, running a technical evaluation and pricing a repeatable sales process.

He believes capital is important for building a substantial company and can support faster product-market fit and growth. Stebbings asks whether heavy financing encourages costly behavior; Raanan says disciplined spending remains the responsibility of founders and investors.

In the interview’s market moment, Raanan says private valuations had begun rising again and describes a new bull market. He reports that Cyberstarts portfolio companies were in the process of raising more than $1.5 billion over the following weeks. Those are contemporaneous observations and anticipated financings, not proof that every round closed.

On liquidity, Raanan says every portfolio company is for sale at the right price, but admits he is not sure he has always chosen the best time to sell. He advises considering the company, fund and wider context rather than applying a single rule.

Cyberstarts uses separate funds for seed and follow-on investing. He says its seed funds were $60 million and its opportunity fund $500 million; the latter follows investments in existing portfolio companies and does not set the price. These are fund details as stated at the interview.

Asked about signaling when a follow-on fund declines to invest, he says Cyberstarts had participated in all of its companies’ Series A and B rounds so far, but does not know whether that will continue. He says maintaining pro rata participation has generally been possible through relationships with other investors.

Raanan does not know whether wealthy investors make better investors. He thinks instincts, knowing one’s game and a strong network matter more than net worth. Money has made his own life more comfortable, he says, by removing one source of worry.

His view on early product marketing changed: he now favors a demand-generation hire first because early companies often lack sufficient pipeline. This is his current hiring preference, not a rule for every market or business.

He rejects the idea that Israeli founders inherently sell too early. When founders sell, he says, their reasons depend on the particular company. He also cautions that if every prospective customer supposedly loves a product, the founder may not have listened closely enough.

His most memorable first meeting with the Adallom team was notable because Assaf Rappaport did not attend; the co-founders came instead. Raanan says founders should not always be fundraising and regards scarcity as a potential advantage.

Raanan praises Doug Leone for caring deeply about founders and their companies. He considers attaching unicorn valuations to companies with around $1 million in revenue a major mistake of the zero-interest-rate era; that is his retrospective judgment.

For the next decade he wants Cyberstarts to be a leading cybersecurity investor and a destination for founders. Personally, he says, he does not make long-term plans: he checks each day whether he still has the energy to continue. The speakers close by thanking each other.