10 Hot Cybersecurity Funding Rounds in Q3
The first two quarters of 2017 have been the most active ever in five years from a cybersecurity investment standpoint. Here's how the third quarter has shaped up.
September 20, 2017
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Statistics maintained by CB Insights show that 2017 is on track to be a record-setting year for cybersecurity funding activity.
There were a total of 291 funding deals involving private cybersecurity companies in the first two quarters of this year alone, making them the busiest from an investment standpoint in the last five years.
CB Insight's research shows that investors poured some $1.6 billion into private cybersecurity firms in Q2 2017: the most ever in a single quarter. Six companies — Cybereason, Data4 Group, CrowdStrike, Netskope, Tanium, and Illumio — had mega $100 million-plus funding rounds in the second quarter of this year. No other quarter has had this many $100 million funding rounds before, according to CB Insights.
Malware outbreaks like the WannaCry pandemic and breaches like the one at Equifax has heightened demand for a variety of security technologies and made cybersecurity vendors a hot commodity in investment circles. The surging demand for security tools and services also has generated considerable startup activity in the security space. Gartner estimates worldwide information spending will top $86 billion this year.
Q3 also has been quite active funding-wise. [After this posting Digital Shadows announced it has raised $26 million in a Series C funding round led by Octopus Ventures, with participation from World Innovation Lab, Industry Ventures, and existing investors.]
Here, in descending order of investment size, is a sampling of some of the cybersecurity funding activity for this period.
In August, cloud data protection vendor Druva announced that it had secured $80 million in growth equity funds, bringing the total amount raised by the company so far to an impressive $200 million. Riverwood Capital led the latest funding round but other significant investors included Sequoia Capital India, Tenaya Capital, and Nexus Venture Partners. Druva will use the late-stage funds on research and development and expanding its go-to-market efforts globally.
Druva's data-management-as-a-service offering allows organizations to manage security on servers, endpoints, and cloud applications via a single pane of glass. As of August, Druva claimed over 4,000 enterprise customers worldwide and 300% annual revenue growth.
Boston-based security startup Threat Stack secured $45 million in a Series C funding round led by Fidelity Investments' venture arm F-Prime Capital Partners and Eight Road Ventures. Threat Stack's intrusion detection platform employs continuous monitoring and risk assessment for enterprise systems on premise, in the cloud, and in hybrid environments. The company claimed over 235% revenue growth and an 84% increase in headcount year over year in July.
Threat Stack will use the new investment to fund innovation efforts and add more staffing. The company has so far raised over $70 million from investors.
Endpoint protection software vendor AppGuard of Chantilly, VA closed a $30 million Series B funding round led by Japan's JTB Corporation in August. AppGuard will use the financing to finalize its purchase of secure video communications technology vendor KeepTree Inc.
AppGuard uses a patented "dynamic isolation" approach to detect and disrupt malware during the initial stages of an attack, which the company says is a faster method than other endpoint protection technologies. AppGuard is a subsidiary of Japanese cybersecurity firm Blue Planet Network, which so far has raised more than $65 million in venture funding from the likes of ANA Airlines and advertising giant Dentsu.
Less than one year after a Microsoft-led Series A funding round, Tel Aviv-based Aqua Security in September announced it had raised another $25 million in Series B funding. The funds, primarily from Lightspeed Venture Partners, will be used to drive expansion of Aqua Security's container security platform. So far, the company has raised a total of $38.5 million.
Aqua's technology was designed for container environments and provides security-policy enforcement. The platform is designed to provide intrusion prevention capabilities and runtime security controls for workloads in a containerized setting. Aqua claims dozens of Global 1000 customers, including two of the 10 largest financial companies in the world.
Dell Technologies Capital and Tri Ventures led a $22 million Series B funding round in IoT security provider ZingBox of Mountain View, Calif., in August. ZingBox will use the fresh capital to accelerate the capabilities of its IoT Guardian technology for discovering IoT devices in an enterprise network, detecting behavioral changes to those devices, and mitigating threats. Some potentially big markets for IoT Guardian include the retail and healthcare sectors.
ZingBox will also use the new funds to grow headcount and expand its market reach.
New York-based digital-identity verification technology provider Socure raised $13.9 million in Series B funding from Commerce Ventures, with participation from other institutional investors including Santander InnoVentures, Work-Bench, and Flint Capital. The August funding round followed another one in December and bought the total amount the company has raised so far to $27.5 million.
Socure's digital identity verification suite is another of the many emerging security technologies that leverages machine learning and AI techniques to verify user identities. Among the customers of the technology are major financial services firms, including a top five US bank and e-commerce sites, according to Socure.
Versive is among the growing number of companies that have begun using machine learning and artificial intelligence techniques to address cybersecurity challenges. The company's Versive Security Engine threat-hunting technology uses these approaches to detect high-risk patterns and anomalous behavior on enterprise networks.
In August the Seattle, Wash.-based security firm raised $12.7 million in venture funding from existing investors Goldman Sachs, Madrona Venture Group, Formation 8, and Vulcan Capital. The company will use the investment to fund its growth in key markets. Versive has so far raised $54.7 million from investors.
Industrial control systems cybersecurity startup Dragos of Hanover, Md., received $10 million in Series A venture capital funding from Energy Impact Partners (EIP) and Allegis Capital and other investors. The company will use money from the August funding round primarily to increase headcount.
Dragos was founded in May 2016 with seed funding of about $1.2 million from DataTribe. It currently offers a suite of three security tools and one assessment product to help organizations monitor for and respond to threats against ICS environments. Its services include threat hunting and incident response in ICS settings. Dragos has partnerships with Deloitte and CrowdStrike.
Security-as-a-service provider EiQ networks in September announced it had secured $7 million in growth capital and had changed its name to Cygilant. The Boston-based company will use the additional funds to accelerate development of its subscription-based SocVue security operations and analytics platform. The company will also use the money on new customer acquisition efforts and to hire more engineers at its security operations centers.
Cygilant has so far raised about $38 million in venture funding since 2009.
In September, Brooklyn, NY-based security startup Capsule8 completed a $6 million round of funding led by Bessemer Venture Partners and other investors. The company will use funds from the Series A round to fund further development of its Capsule8 Protect technology for native cloud environments and also to prepare the product for general launch later this year.
Capsule8 Protect, according to the company, is a fully automated platform that uses data continuously gathered from various sources network and analyzed in real-time to quickly detect and stop attacks as they begin to unfold.
Capsule8, which was founded by several well-known hackers including Dino Dai Zovi, has so far raised more than $8.5 million in investor funds.
In September, Brooklyn, NY-based security startup Capsule8 completed a $6 million round of funding led by Bessemer Venture Partners and other investors. The company will use funds from the Series A round to fund further development of its Capsule8 Protect technology for native cloud environments and also to prepare the product for general launch later this year.
Capsule8 Protect, according to the company, is a fully automated platform that uses data continuously gathered from various sources network and analyzed in real-time to quickly detect and stop attacks as they begin to unfold.
Capsule8, which was founded by several well-known hackers including Dino Dai Zovi, has so far raised more than $8.5 million in investor funds.
Statistics maintained by CB Insights show that 2017 is on track to be a record-setting year for cybersecurity funding activity.
There were a total of 291 funding deals involving private cybersecurity companies in the first two quarters of this year alone, making them the busiest from an investment standpoint in the last five years.
CB Insight's research shows that investors poured some $1.6 billion into private cybersecurity firms in Q2 2017: the most ever in a single quarter. Six companies — Cybereason, Data4 Group, CrowdStrike, Netskope, Tanium, and Illumio — had mega $100 million-plus funding rounds in the second quarter of this year. No other quarter has had this many $100 million funding rounds before, according to CB Insights.
Malware outbreaks like the WannaCry pandemic and breaches like the one at Equifax has heightened demand for a variety of security technologies and made cybersecurity vendors a hot commodity in investment circles. The surging demand for security tools and services also has generated considerable startup activity in the security space. Gartner estimates worldwide information spending will top $86 billion this year.
Q3 also has been quite active funding-wise. [After this posting Digital Shadows announced it has raised $26 million in a Series C funding round led by Octopus Ventures, with participation from World Innovation Lab, Industry Ventures, and existing investors.]
Here, in descending order of investment size, is a sampling of some of the cybersecurity funding activity for this period.
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