Investors pour billions in to cybersecurity firms

Venture capital firms and corporate investors have put a record amount of money in to cybersecurity companies over the past year, and there's no end in sight.

pile of cash

Last week we reported that the cybersecurity market is white hot, and we shared a list of mergers and acquisitions in the space. We promised to follow up this week with VC and corporate investment deals, so here it comes.

Before we give you the list of deals, let's set the stage with some cyber market figures and goings-on.

The worldwide cybersecurity market is defined by market sizing estimates that range from $77 billion in 2015 to $170 billion by 2020. We broke these numbers down in a previous blog.

Globally, venture-backed cybersecurity companies raised $1.9 billion last year, a record, according to Dow Jones VentureSource.

CB Insights reported that in the first half of 2015, venture firms invested $1.2 billion into cybersecurity startups. Yup, you read it correctly - one point two billion in just the first six months of 2015.

Allegis Capital, a leading seed and early stage venture capital investor in companies building disruptive and innovative cybersecurity solutions for the global digital economy, has raised a $100 million fund to back cybersecurity startups. “There is a substantial need for new and promising cyber security startups and a huge investment opportunity in them,” said Allegis Founder and Managing Director Robert Ackerman.

Our list of recent noteworthy investment deals, by the largest dollar figures:

CrowdStrike, provider of the first true Software-as-a Service (SaaS) based next-generation endpoint protection platform, completes a $100 million Series C financing round, led by Google Capital. Rackspace, a CrowdStrike customer, also participated in the round along with existing investors Accel and Warburg Pincus. This brings the company’s total funding raised to $156 million.

Checkmarx, a global leader in software application security, secures an $84 million investment from New York-based venture capital and private equity firm, Insight Venture Partners. The new round of capital will be primarily used to further accelerate growth through product innovation and global expansion.

Tanium, the company that has redefined security and systems management, announced that Andreessen Horowitz invested an additional $52 million in the company. This subsequent investment in Tanium is a follow-up to Andreessen Horowitz’s initial financing of $90 million in May 2014 and constitutes one of its largest investments to-date.

Cylance, the first next-generation endpoint protection company to successfully apply artificial intelligence to predictively identify and stop cyber attacks before they ever execute, has closed more than $42 million in Series C funding. Led by DFJ Growth, the round includes investments from KKR, Dell Ventures, Capital One Ventures and TenEleven Ventures.

Venafi, the immune system for the Internet and leading provider of Next Generation Trust Protection, receives $39 million in additional funding. The financing was led by QuestMark Partners and other new investors Intel Capital and Silver Lake Waterman and existing investors. The investment will accelerate development of the Venafi Trust Protection Platform to secure more Global 5000 businesses and governments and support its fast-growing worldwide customer base.

Cyphort, a pioneer of Advanced Threat Defense (ATD) solutions, secures $30 million in Series C funding. Sapphire Ventures led the round and was joined by all existing investors: Trinity Ventures, Foundation Capital and Matrix Partners. The latest round of funding will be used to help with the security company’s rapid growth and expansion into new markets. The new funding brings Cyphort’s total investment to more than $53 million since inception.

Cybereason, a provider of threat detection solutions, closes a $25 million Series B funding round, with defense contractor Lockheed Martin participating as a strategic investor. Led by Spark Capital with existing investor CRV also participating in the round, the startup said the funds would be used to expand its research and development and support sales and marketing efforts.

HackerOne, the vulnerability management and bug bounty platform, secures a Series B financing of $25 million led by New Enterprise Associates (NEA). The round includes participation from existing investors, including Benchmark, as well as numerous angel investors including Salesforce Chairman and CEO Marc Benioff, among others.

Menlo Security closes a $25 million Series B funding round led by new investor Sutter Hill Ventures and joined by existing investors General Catalyst, Osage University Partners and Engineering Capital to support the company’s rapid growth.

HyTrust, the cloud security automation company, raises $25 million in a Series D round, plus $8 million in venture debt and credit facilities from a syndicate of venture capital firms and strategic investors. This brings the total investment in HyTrust to $84.5 million from 11 investors.

Ziften, a leader in continuous endpoint visibility, raises $24 million in funding led by Spring Mountain Capital, with significant participation from Fayez Sarofim, an early investor in Ziften. The equity financing round will accelerate Ziften’s go-to-market strategy and extend its global reach as it delivers on the demands of organizations for a security solution that swiftly discovers, analyzes, and plugs security exposures to harden corporate resiliency.

BitSight Technologies, the standard in Security Ratings, closes a $23 million round of Series B financing. Comcast Ventures joins as a new investor together with current investors Globespan Capital Partners, Menlo Ventures, Commonwealth Capital Ventures, Shaun McConnon and Flybridge Capital Partners, all participating in the round of funding. New funding will be used to extend sales and marketing into Europe and APAC, expand engineering and data science teams to accelerate the company’s new data analytics products, and fund potential acquisitions of key data source partners. BitSight has raised $49 million to date.

Distil Networks, a company that analyzes website traffic and blocks malicious bots, closes a $21 million Series B round. Bessemer Venture Partners led the round. Investors Foundry, TechStars, ff Venture Capital, Idea Fund and Correlation Ventures also participated. The investment brings the total raised to $38 million.

Niara, a stealth security analytics company, closes a $20 million Series B financing round led by Venrock, with additional participants including New Enterprise Associates (NEA) and Index Ventures.

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