Zscaler Acquires Avalor to Enhance AI Capabilities in Its Security Solutions

Zscaler, a leading cloud security firm based in San Jose, California, has announced its acquisition of cybersecurity startup Avalor just 26 months after Avalor's inception. The deal is reported to involve $310 million in cash and equity.

In the press release announcing this acquisition, Zscaler's founder and CEO, Jay Chaudhry, emphasized that the integration would enhance Zscaler's platform by adding capabilities such as efficient reporting of security incidents, incident management, asset discovery, data classification, and automated security policy generation.

“AI is only as effective as the data it relies on, and many current solutions lack comprehensive context from diverse enterprise data sources to maximize the potential of security-specific AI models,” Chaudhry stated. “Zscaler operates the world’s largest security cloud, equipped with the most relevant data to train specialized large language models for security purposes. With the Avalor acquisition, we will be able to identify vulnerabilities more effectively and proactively prevent breaches.”

Co-founded by Raanan Raz and Kfir Tishbi—who previously led engineering at Datorama, a marketing analytics firm acquired by Salesforce in 2018—Avalor serves as a central repository for cybersecurity assets, controls, identities, vulnerabilities, and other critical data points. This capability enables security teams to aggregate, normalize, de-duplicate, and track risk data from initial discovery to full remediation.

While the concept isn't unique, as other startups like Securiti and Dig Security address similar challenges, Avalor distinguishes itself by its ability to process data from virtually any source and format, along with its advanced tools for vulnerability risk management and prioritization.

Before joining Zscaler, Avalor successfully raised $30 million from investors such as TCV, Salesforce Ventures, Jibe Ventures, and Cyberstarts. Raz believes that being part of Zscaler will propel the business—and its approximately 80-person team across the U.S. and Israel—to new heights.

“With Zscaler, we gain immediate access to resources that would have taken us years to develop on our own—7,000 customers, 4,200 global channel partners, widespread customer familiarity, and the validation of a billion-dollar business model,” Raz shared in a recent blog post on Avalor’s site. “We’ll continue to function independently as a complete Avalor team, backed by the incredible resources from Zscaler.”

This marks Zscaler’s third acquisition, following the purchase of Canonic, a startup dedicated to protecting software-as-a-service products from cyber threats, and Trustdome, which focuses on cloud infrastructure entitlement management. Since its founding in 2007 by Chaudhry and K. Kailash, Zscaler has experienced rapid growth, going public in March 2018, and currently boasts around 7,000 employees with a market capitalization of approximately $30 billion.

As noted by Crunchbase’s Chris Metinko, Zscaler's acquisition, along with others in the cybersecurity sector, may catalyze activity in a currently stagnant mergers and acquisitions (M&A) landscape. Last year recorded just 66 M&A deals involving venture capital-backed cybersecurity startups, representing a 26% decline from 2022 when there were 89 deals, and over a 50% drop from 2021, which saw 139 transactions.

In 2024, there have already been 18 notable cybersecurity-related mergers and acquisitions, with significant movements from companies like Wiz, SentinelOne, and CrowdStrike.