Main Highlights
- Today, LG announced the acquisition of Cybellum, an Israeli automotive cybersecurity specialist
- LG stated that the agreement will be broken up into many sections
- As of today, provided the value remains steady, the acquisition will be worth around $240 million
- Bronfman stated that the aim is to continue working with all of these firms for the time being while being an autonomous company
LG Electronics, the Korean tech behemoth that was once a market leader in mobile phones but is now focusing on other, developing areas, has made a purchase that hints at its goals in another, rising area: next-generation automotive hardware and services. Today, the firm announced the acquisition of Cybellum, an Israeli automotive cybersecurity specialist that uses a “digital twin” technique to discover and analyze vulnerabilities in connected car services and hardware.
How will LG proceed?
LG stated that the agreement will be broken up into many sections. It will first purchase a 64% share in Cybellum for $140 million, and will contribute an additional $20 million in the form of a simple agreement for future equity (SAFE) note “upon completion of the trading procedure in the fourth quarter.” The remaining shares will be bought in the “near future” (no specific date), at which point the full valuation and investment will be verified.
As of today, provided the value remains steady, the acquisition will be worth around $240 million (market forces or the company’s own business funnel might have an influence on this). LG has built a reputation as an investor in promising automotive startups, but this is its first acquisition outside of Israel – Cybellum is located in Tel Aviv — and demonstrates the larger company’s interest in delivering software solutions to the care sector as well as hardware.
“It is no secret that software plays a crucial role in the automobile sector, and with that comes the necessity for efficient cybersecurity solutions,” said Dr. Kim Jin-yong, president of LG Electronics Vehicle component Solutions Company, in a statement. “This latest agreement will reinforce LG’s excellent foundation in cybersecurity, allowing us to be even more prepared for the connected car era.” LG has had its sights on this market for quite some time.
Cybellum’s investors, which included Blumberg Capital, Target Global, and RSBG Ventures, received a solid return (the venture arm of German industrial giant RAG). Prior to this, Cybellum had raised little more than $14 million.
The business, launched in 2016 by Slava Bronfman and Michael Engstler, two cybersecurity alums from the Israeli Defense Forces, has over the years gained a number of high-profile customers, including Jaguar Land Rover and Nissan, as well as partners such as Harman, Toyota Tsusho, and PTC.
Bronfman stated that the aim is to continue working with all of these firms for the time being while being an autonomous company. The technology of Cybellum, and LG’s acquisition of it, highlight several key developments in the worlds of connected automobiles and cybersecurity.
When you consider the various components that go into automobiles, as well as the different OEMs and automotive businesses at work in the larger ecosystem of the vehicle, connected vehicles provide a new attack vector for malevolent hackers and a very sophisticated one. That will only grow more complicated as vehicles become “smarter,” “connected,” and eventually “autonomous”: there will be more linked systems, and even greater reliance on them operating correctly to function safely.
One of the most difficult issues has been developing a unified strategy for cybersecurity across all of this. LG, as a current market participant with plans to expand its position, is investing in both its future business and addressing broader industry services need.
Cybellum’s strategy
Cybellum’s strategy is to construct a so-called “digital twin” of the system — a technique already used in enterprise IT and healthcare — and monitor it in order to capture the entire picture in order to discover and analyze dangers. This is one method of bridging fragmentation among separate components while monitoring events in real-time without taxing the vehicle’s systems.
“First and foremost, this is a secure investment,” Bronfman explained. “Cybellum is a cybersecurity business. As one of the major automotive suppliers, LG prioritizes cybersecurity since they recognize its importance in the present era of connected vehicles and the transition to autonomous vehicles.” LG is not yet a Cybellum partner, but Bronfman stated that the first integrations between the two are expected in 2022.