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Intel, Google, VCs Pour Billions into Cybersecurity Startups

By May 10, 2015Article

Billions of dollars in venture capital is fueling the cybersecurity boom. According to New York City-based CB Insights, in the last five years, $7.3 billion has been invested into 1,208 private cybersecurity startups. Funding in 2014 broke the $2 billion barrier for the first time while deals continued their steady ascent growing to 269 (cybersecurity) deals. 

The venture arms at a couple of the world’s largest tech companies are the top 10 most active investors in the cybersecurity space. 

  • Intel Capital is the top investor in cybersecurity startups and they’ve poured money in to more than 20 of those companies over the past five years. Intel is also one of the largest cybersecurity product vendors since announcing their acquisition of McAfee (a leading anti-virus and security software vendor) in February, 2011. The Intel Security Group is listed at #19 on the Cybersecurity 500 list of the world’s hottest and most innovative cybersecurity companies. 
  • Google Ventures is the other corporate investor that is one of the 10 most active VCs in the cybersecurity space. Google is also listed on the Cybersecurity 500, at #255. The market is anxiously awaiting more details on Google’s Cloud Security Scanner, which is currently a beta release. Google has been known to acquire cybersecurity companies to help strengthen the Google apps and fight spam, fraud, Web abuse and other cyber-criminal activity. Acquiring cybersecurity companies is also a great way to absorb cybersecurity technical talent, which is in high demand and short supply. 

It will be interesting to see where Google is going with the Cloud Security Scanner and if they will target developers and end users with a commercial product. Either way, Google is responsible for protecting a gigantic global user base of its technology. 

The Q2 2015 Edition of the Cybersecurity Market Report listed the following recent cybersecurity deals and investments. 

Area 1 Security (Menlo Park, CA), a cybersecurity startup focused on social engineering attacks, raised $8 million in Series A funding, led by Kleiner Perkins Caufield & Byers. The company has now raised $10.5 million. Other backers include Allegis Capital, Cowboy Ventures, Data Collective, First Round Capital, RedSeal Networks CEO and former Venrock Partner Ray Rothrock and Shape Security CEO Derek Smith. 

CipherCloud (San Jose, Calif.), a provider of cloud visibility and data protection solutions, raised $50 million in Series B funding, led by Transamerica Ventures, along with Delta Partners, Andreessen Horowitz and T-Venture. 

Clef (Oakland, Calif.), which provided a two-factor authentication solution that uses Apple’s fingerprint reader rather than passwords, raised $1.6 million in seed funding from Morado Ventures and individual angel investors. 

CloudLock (Waltham, Mass.), a cloud-based data security company, raised $6.7 million in its fourth round of funding. The company previously raised $28 million from Bessemer Venture Partners, Cedar Fund and Ascent Venture Partners. 

Cyber Squared (Arlington, Va.), a developer of a cyberthreat intelligence platform, raised $4 million in its first round of funding and renamed the company ThreatConnect. The round was led by GroTech Ventures. Funds will be used to accelerate product development and expand sales and marketing globally. 

Darktrace, a British cybersecurity firm backed by former Autonomy boss Mike Lynch, raised $18 million. Investors Talis Capital and Hoxton Ventures joined Lynch’s Invoke Capital in the funding round. 

Datashield (Park City, Utah), a provider of cybersecurity solutions, secured $4 million mezzanine loan and equity commitment from Huntington Capital. 

DB Networks (Carlsbad, Calif.), a provider of cybersecurity that leverages machine learning and behavioral analysis, raised $17 million in new VC funding. The round was led by Grotech Ventures and joined by Khosla Ventures and Citi Ventures. 

Dtex Systems (San Jose, Calif.), a provider of insider threat protection solutions, raised $15 million in Series A, led by Norwest Venture Partners and Wing Ventures. 

Emailage (Chandler, Ariz.), a provider of fraud prevention solutions, secured $3.8 million in funding led by Felicis Ventures, in addition to Double M Partners and Mucker Capital. 

EdgeWave (San Diego, Calif.), a provider of military-grade cybersecurity solutions, raised $2 million in additional Series A from TVC Capital, Northgate and Bill Baumel and RWI Ventures’ partners. Total 2014 capital raised is $8 million. 

Endgame (Arlington, Va.), a developer of security intelligence and analytics tools, raised $30 million in its third round. The round was co-led by new investors Edgemore Capital and Top Tier Capital Partners. Previous backers Bessemer Venture Partners, Paladin Capital Group, Columbia Capital and Kleiner Perkins Caufield & Byers also participated in addition to Savano Capital Partners. (Dublin, Calif.), a provider of continuous cloud security technology for AWS, raised $9.85 million in Series A, led by Bain Capital Ventures. True Ventures also participated. The company previously raised $1.5 million in seed funding from True Ventures. 

Cybersecurity startup Illumio (Sunnyvale, Calif.) raised $100 million in series C financing round. Illumio provides a cloud and data center security platform. 

Ionic Security (Atlanta, Ga.), a provider of a distributed data protection platform for the enterprise, raised $40.1 million in Series C, led by Meritech Capital Partners. Other backers include Kleiner Perkins Caufield & Byers and return backers Google Ventures, Tech Operators and Jafco Ventures.

iSIGHT Partners (Dallas, Texas), a provider of cyberthreat intelligence solutions, secured $30 million in Series C funding from Bessemer Venture Partners. The company will use the proceeds to bolster its intelligence services, enhance its core ThreatScape products, develop new partnerships and expand its sales and marketing activities. 

Lookingglass (Arlington, Va.), a cyberthreat intelligence monitoring and management provider, closed a $20 million Series B round led by New York-based Neuberger Berman Private Equity Funds. 

NexDefense (Atlanta, Ga.), a cybersecurity firm, raised $2.4 million. The round was led by Mosley Ventures and Buckhead Investment Partners. 

NowSecure (Oak Park, Ill.), a mobile device data security and management, raised $12.5 million in Series A. Baird Capital led the round and was joined by Math Venture Partners and Jump Capital. 

PayPal acquired CyActive, an Israeli cybersecurity company for $60 million. 

Phantom Cyber, a cybersecurity startup with an ambitious idea to automate cybersecurity, announced a $2.7M seed round with backing from some of the biggest names in computer security. Investors include John W. Thompson, former CEO of Symantec; Thomas E. Noonan, former CEO of Internet Security Systems (ISS); John C. Becker, former CEO of Sourcefire; and Zach Nelson, CEO of NetSuite Inc. (previously a senior executive with McAfee, now part of Intel). 

Pindrop Security (Atlanta, Ga.), a provider of phone fraud prevention and call center authentication, raised $35 million in Series B funding. 

Rapid7 (Boston, Mass.), a provider of security analytics software and services, closed $30 million in funding from Bain Capital and Technology Crossover Ventures. Rapid7, whose investors include Bain Capital Ventures and Technology Crossover Ventures, chose Morgan Stanley and Barclays to assist with an initial public offering, according to Reuters. 

SecureKey Technologies (Toronto, Canada), a provider of identity and authentication solutions, secured $19 million in Series C, led by Blue Sky Capital and Rogers Venture Partners LLC. 

Mobile security company Skycure (Tel Aviv-Israel) raised $8 million to fund new research and development. Shasta Ventures, Pitango Venture Capital and Michael Weider contributed to the round. Skycure has raised a total of $11 million to date. 

Nok Nok Labs (Palo Alto, Calif.), a provider of authentication solutions, raised $8.25 million in Series C. Backers include DDS Inc., Raven Ventures, DCM Ventures, Lenovo Group Limited and ONSET Ventures. 

Sqrrl (Cambridge, Mass.), a provider of big data analytics for identifying and responding to cyberthreats, raised $7 million in Series B, led by Rally Ventures, joined by Atlas Venture and Matrix Partners. The company also unveiled new software aimed at detecting and responding to cybersecurity threats. Total funding to date is now $14.2 million. 

Team8 (Israel), a cybersecurity startup foundry and think tank, raised $18 million in Series A. Backers include Alcatel-Lucent, Bessemer Venture Partners, Cisco Investments and Innovation Endeavors. 

ThreatStream (Redwood City, Calif.), a SaaS-based cybersecurity threat intelligence platform, raised $22 million in Series B led by General Catalyst Partners. Other investors include Institutional Venture Partners, Google Ventures and Paladin Capital Group. 

Vkansee Technology (Beijing, China), a provider of fingerprint sensors for mobile security, raised $7 million in venture capital from the Aviation Industry Corp. of China. 

V-Key Inc. (Singapore), a provider of mobile security and cryptographic technology, raised $12 million in Series B from Ant Financial and return backer IPV Capital. 

Zimperium (San Francisco, Calif.), a provider of mobile threat defense solutions, raised $12 million in Series B, led by Telstra Ventures, in addition to TOYO Corp., Sierra Ventures, Lazarus Israel Opportunities Fund and Samsung. 

The worldwide cybersecurity market is defined by market sizing estimates that range from $71 billion in 2014 to $155+ billion by 2019. To see additional cybersecurity VC deal activity, plus M&A deals and IPOs, go to the Cybersecurity Market Report at 

Steve Morgan is founder and CEO at Cybersecurity Ventures and editor-in-chief of the Cybersecurity Market Report and the Cybersecurity 500 list of the world’s hottest and most innovative cybersecurity companies. Follow Steve on Twitter or connect with him on LinkedIn.

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