Israel's Koi sold to Palo Alto before most employees got options

Palo Alto Networks announced the acquisition of Tel Aviv-based cybersecurity startup Koi Security for an estimated US$400 million, shortly after its series A round in late 2025.

Founded in mid-2024, Koi raised US$48 million across both rounds.

According to people familiar with the matter, management had not completed employee stock option allocations before signing the deal.

Most employees, except roughly the first 10 hires who received a small equity pool, had not been granted options, causing frustration.

According to sources, the founders, each owning about 12%, decided to allocate part of their personal proceeds — expected to be around US$50 million each — as bonuses broadly equivalent to missed options.

Some of these bonuses may convert into Palo Alto shares.

🔗 Source: Calcalist

🧠 Food for thought

Implications, context, and why it matters.

Why a one-year-old startup is worth $400 million

The reported acquisition price fits Palo Alto Networks’ push to shape a new security category it calls “Agentic Endpoint Security” 1.
Koi’s platform, called Supply Chain Gateway, uses AI to spot threats in software components before deployment, so teams can stop risky code before it reaches employee devices.
With a reported roughly $400 million price for a one-year-old company 2, Palo Alto Networks is wagering that this risk will soon become a standard enterprise security layer, with the goal of taking the market early 3.

The race to secure AI agents mirrors the platform wars of the past

The deal suggests large vendors treat AI agents as a new computing platform that needs a dedicated control layer.
It echoes Microsoft’s 2001 stance on Linux desktops as a “threat” that called for proactive “intercepting” to keep platform control 4.
Palo Alto Networks will integrate Koi’s technology into its Cortex XDR platform 5, aiming to become the default security provider for enterprises that adopt AI agents.
This step pushes competitors to build or buy similar tools, turning AI agent security into a new contest for cybersecurity platform control.