JERUSALEM, Sept 17 (Reuters) - Glilot Capital, one of

Israel's largest venture capital funds, said on Wednesday it had

raised $500 million for two new early-stage funds to invest in

fast-growing Israeli AI and cybersecurity startups.

Glilot said the money was raised mainly from international

investors, including pension funds and other financial

institutions in the U.S. and Europe, suggesting little adverse

impact from the widespread criticism of Israel over its actions

in Gaza.

The cash will go to two new Glilot funds - a seed fund, its

fifth, and another that invests in early-stage companies called

Glilot Plus.

Glilot has realised 22 investments since its founding in

2011.

Kobi Samboursky, co-founder and managing partner, said each

of the new funds aimed to invest in 12 AI and cybersecurity

startups in the coming years. Glilot's funds have invested in

eight companies so far this year, while portfolio companies have

received $700 million in follow-on investment.

"Cyber is now bigger than ever and I don't think it's going

to end anytime soon," Samboursky, a former officer in the

Israeli military's 8200 intelligence unit, told Reuters, adding

he preferred to not invest in too many companies.

He said half of the new funding would go to new investments

and the rest to follow-on investments. Glilot has more than $1

billion under management.

Investment, Samboursky said, would be focused largely on

startups that protect companies' AI as well as attacks stemming

from AI - technology that combines AI and cybersecurity.

"This (segment) is going to be bigger than cloud security,"

Samboursky said. "In the next five, six years we have the

potential to create a lot of great companies because of this

combination."

He said that cyber hackers were increasingly using AI so "we

as an industry need to come up with solutions to cope with that

... We already are starting to see much more sophisticated

attacks so we have to completely reinvent the way we protect"

against them.

Israel has become a global leader in cyber security, which

accounts for about half of all investment in Israeli tech

startups.

In July, Palo Alto Networks ( PANW ) said it was buying

Israeli peer CyberArk Software for about $25 billion.

That followed Alphabet's $32 billion acquisition of

Israeli startup Wiz in March.

"It's clear," Samboursky said, "that Israel is number one in

the cyber domain."