Israeli cybersecurity startup Dream has secured $260 million in a new private funding round, boosting the company's valuation to $3 billion as demand for AI-powered cyber defense solutions continues to grow worldwide.

Founded in 2023, Dream was co-founded by Shalev Hulio, the former CEO and co-founder of NSO Group, alongside former Austrian Chancellor Sebastian Kurz and cybersecurity experts. The company focuses on helping governments and critical infrastructure operators defend against increasingly sophisticated cyber threats.

Unlike NSO Group, which became known for licensing its Pegasus spyware technology to governments and law enforcement agencies, Dream specializes in cyber defense. Its technology is designed to protect essential infrastructure, including water systems, energy facilities, and other critical public services from cyberattacks.

On Wednesday, Dream unveiled Atlas, its new sovereign AI platform aimed at strengthening national cybersecurity capabilities. The company says the platform is designed to detect and prevent both human-led and AI-generated cyber threats.

According to Hulio, Dream generated approximately $300 million in government-related sales across Europe, the Middle East, and Asia last year. He said the company has helped prevent major cyberattacks originating from countries including China, Russia, Iran, and North Korea.

Dream currently employs around 350 people across offices in Tel Aviv, Abu Dhabi, and Vienna. The newly raised capital will be used to accelerate the deployment of its sovereign AI and cyber defense platforms across Europe, the Middle East, Asia, and the Americas.

Hulio believes artificial intelligence will play a defining role in future cybersecurity battles.

"Everybody understands that the next cyber war is going to be AI versus AI," he said, adding that Dream's technology is designed to combat cyberattacks launched by both human actors and autonomous AI systems.

Co-founder Sebastian Kurz said growing geopolitical uncertainty is driving governments to seek greater technological independence and digital sovereignty.

The funding round was co-led by Bicycle Capital and Group 11, with participation from Antler, Bain Capital Ventures, Tru Arrow Partners, and several other global investors.

Looking ahead, Hulio said Dream plans to continue expanding rapidly and eventually pursue a public listing.