GuardKnox collapses after raising $60 million, blames war for lost funding
GuardKnox collapses after raising $60 million, blames war for lost funding
The auto-cybersecurity company files for insolvency after investors withdrew $30 million in planned funding.
Israeli auto-tech company GuardKnox, which has raised $60 million to date, has filed for insolvency after accumulating debts of NIS 11 million ($3.06 million).
Founded in 2016 by Israel Air Force veterans Moshe Shlisel, Dionis Teshler, and Idan Nadav, Guardknox developed an automotive cybersecurity product that includes both software and hardware. GuardKnox specialized in protecting smart and autonomous vehicles from cyber threats.
According to an insolvency filing submitted by attorneys Dr. Shlomo Nass, Inbal Rahamim-Avital, and Itay Michaeli of the Firon law firm, the company's financial troubles began during the COVID-19 pandemic. In 2021, it was forced to raise only $6 million in funding instead of the $13 million it had initially sought. The situation worsened further following the outbreak of war in Israel. The company claims that investors who were scheduled to arrive in Israel during the week of October 8, 2023, to finalize investment agreements totaling approximately $30 million canceled their visit due to the deteriorating geopolitical situation. Additionally, an investor who had committed $5 million unexpectedly passed away.
GuardKnox's NIS 11 million ($3.06 million) in debts include NIS 4 million ($1.1 million) owed to a transportation company and NIS 3 million ($833,000) in unpaid wages to employees. The filing states that the company has not paid salaries to its 27 employees for November and December. In an attempt to cut costs, the board of directors decided in February 2024, following a recommendation from the CEO, to reduce employee salaries to 80% of their original wages.
GuardKnox's investors include Fraser McCombs Capital, French auto parts manufacturer Faurecia, Chinese automaker SAIC, Shanghai-based venture capital fund Glory Ventures, NextLeap Ventures, Nasdaq-listed automotive investment company VectoIQ Acquisition Corp., and Silicon Valley-based Plug and Play Ventures.
The filing also states that the board of directors has decided to seek court approval for insolvency proceedings aimed at restructuring and recovering the company while maintaining operations on a minimal scale. This move is intended to prevent further financial deterioration and salvage what remains of the business.
According to the filing, throughout 2024, GuardKnox implemented cost-cutting measures, including workforce reductions and the closure of a product line, reducing its workforce by two-thirds—from 80 employees at its peak to just 27 employees, who are currently based in Israel and the U.S.
Since its founding, GuardKnox has provided cybersecurity solutions to a range of clients, including Porsche, Mercedes-Benz, VDL, and the U.S. Army. The company states that if it can recover from the crisis, it plans to continue selling its services to other clients, such as Dacia, Polaris, and STMicroelectronics.
