The biggest security startup deals of 2018 (so far)

VCs are funding AI to solve cybersecurity problems

intro biggest security startups 2018
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The biggest security startup deals of 2018

Despite high demand for more and better cybersecurity products, investment in U.S. venture-capital backed security companies is falling. What little investment there is has tended to favor companies applying machine learning techniques to security problems. After a peak of 60 deals worth a total of $1.3 billion in the second quarter of 2017, VC investment in U.S. cybersecurity companies dropped back to a level last seen in late 2016, with 51 deals worth a total of $528 million in the first quarter of 2018, according to a study by PricewaterhouseCoopers and CB Insights. Here are the five largest dealmakers that will be bringing you the next wave of security technology.

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Sift Science

Sift Science uses machine learning to detect and prevent fraud. It aggregates data on user behavior from over 6,000 sites and apps, allowing it to assign risk scores to users of a site based on how they, or users like them, have behaved elsewhere. Its tools to perform device fingerprinting and prevent account takeover or content abuse are used by dating services, classified ad markets, and e-commerce platforms, among others. It plans to use a $53 million investment from Stripes Group and others to extend its platform and expand globally.

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DataVisor uses unsupervised machine learning to fight fraud. Rather than creating a black box that accepts or rejects transactions, though, DataVisor has added an automated rules engine, using machine learning to generate new, human-readable rules to evaluate the effectiveness of existing rules. The combination is used to fight money laundering, account takeovers, fake reviews, and more. With $40 million in funding from Sequoia China and others, it will invest in international expansion. Sequoia sees China as particularly ripe for deployment of AI-based antifraud systems.

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Anomali’s ThreatStream threat intelligence platform can tap into a wide range of information sources that describe cyberthreats using the CybOX and STIX specifications and share the data with the TAXII protocol. It can pass that information directly to firewalls, intrusion prevention systems, security information and event management tools, and more. Anomali Enterprise offers real-time forensics by applying that threat intelligence platform to identify indicators of compromise in the corporate IT environment. In January Anomali landed $40 million in additional funding from Lumia Capital and others to continue its development in the U.S. and internationally.

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Vectra Networks

Vectra Networks is another company applying artificial intelligence techniques to cybersecurity. It looks at network traffic and system logs, looking for indicators of compromise and suspicious behavior to uncover attack campaigns and identify network hosts under attack. It can report on cloud and data center workloads, laptops mobile devices and the internet of things. In February Vectra won a further $36 million from Atlantic Bridge and others to fund its global expansion. It will also open an R&D center in Dublin to continue work on its Cognito threat-hunting platform.

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Digital Reasoning Systems

Digital Reasoning looks not at the cybersecurity threats hidden in computer communications, but at the sentiment and intent hidden in human communications. It analyses text, audio and video to help security and intelligence analysts by identifying data leakage or erratic behaviors. In the financial industry it can help with regulatory compliance in messaging, while non-security applications include healthcare and customer service. With the $30 million it raised from BNP Paribas and others in March, it will develop new tools for capital markets and wealth management, and add new capabilities in speech analytic and natural language understanding.

Copyright © 2018 IDG Communications, Inc.

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