US Private Equity Giant AE Industrial Acquires Israeli Spyware Firm Paragon
Key Details of the Acquisition
Israeli spyware manufacturer Paragon, a relatively low-profile player in the surveillance technology sector, has been acquired by AE Industrial Partners, a major U.S. private equity firm. The deal, first reported by Israeli news outlets, underscores the growing interest of Western investors in cybersecurity and surveillance technologies.
Deal Structure & Financials
- Total Valuation: Up to $900 million, contingent on performance milestones
- Upfront Payment: $450–500 million (reports vary)
- 20% allocated to Paragon’s 400 employees
- 30% to the company’s five co-founders
- 50% to investors Battery Ventures (U.S.) and Red Dot Capital Partners (Israel)
Who Is Paragon?
First exposed by Forbes in 2021, Paragon operates discreetly—without even a public website. The company was founded by ex-Israeli intelligence operatives, including:
- Ehud Schneorson: Former commander of Unit 8200, Israel’s elite cyber intelligence unit
- Idan Nurick (CEO), Igor Bogudlov (CTO), and Liad Avraham (VP of Research)
Paragon’s Spyware: Graphite
Paragon’s flagship product, Graphite, is a Pegasus-like spyware capable of infiltrating encrypted apps like:
- Signal
- Facebook Messenger
- Gmail
Government Contracts & Controversies
ICE Contract
In October 2024, U.S. Immigration and Customs Enforcement (ICE) signed a $2 million contract with Paragon for:
- Licenses
- Hardware
- Training & maintenance
According to The New Yorker, Paragon underwent a vetting process to ensure its tools couldn’t be weaponized against U.S. citizens—a critical distinction from compe*****s like NSO Group.
NSO Group Parallels
NSO Group, maker of Pegasus spyware, faced U.S. sanctions in 2021 after its tools were allegedly used to target:
- American diplomats
- Journalists
- Activists
This led to its placement on the U.S. Department of Commerce’s blocklist, barring U.S. companies from trading with it.
Broader Trend: Private Equity in Spyware
AE Industrial’s acquisition follows a pattern of Western investment in Israeli surveillance firms:
- 2014: Francisco Partners acquired 70% of NSO Group for $130 million
- 2019: NSO’s founders bought back the company, regaining control
No Comment from Key Parties
- AE Industrial, Battery Ventures, and Red Dot declined or did not respond to requests for comment.
- Paragon’s leadership (Nurick, Avraham, Bogudlov, Schneorson) also remained silent.
Secure Tip Line
For confidential insights on government spyware, contact Lorenzo Franceschi-Bicchierai securely via:
- Signal: +1 917 257 1382
- Telegram/Keybase: @lorenzofb
- Email: [email protected]
- SecureDrop: TechCrunch’s SecureTip Portal
This story is developing. Check back for updates.
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