Funding, DC Acquisitions Lead Hot Start to 2019

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Written by Kieran McQuilkin, as featured on American Inno. --

Money has been pouring into the cybersecurity industry globally – and in the DMV – as both government and enterprise clients get serious about keeping their information secure.

A recent report from D.C.-based Strategic Cyber Ventures says 2018 brought record global highs in dollars invested and average deal size for cybersecurity companies. While dollar amounts went through the roof ($5.3 billion globally), the volume of deals about equaled last year’s, leaving some wondering whether that growth is sustainable.

In the D.C. area, funding trends mirror those of the broader cybersecurity industry, with larger and fewer deals – nearly $1 billion was invested in DMV cybersecurity startups between 2014 and 2018.

On the hiring side, several local cybersecurity firms are bolstering their executive ranks and engineering teams to fuel the growth.

According to a report by staffing agency Robert Half, 73 percent of D.C. tech businesses plan to expand their teams in 2019 and cybersecurity is one of the top skills in immediate demand. It also says that maintaining the security of IT systems was one of the top concerns for area companies this year – foreshadowing a continued increase in cybersecurity spending.

We rounded up some of the top D.C. cybersecurity acquisitions, hires and funding deals from the first quarter of 2019.

Funding

Fulton, Md.-based cybersecurity startup RackTop Systems closed a $15 million equity round to boost its data storage and security platform. The financing comes from a who’s who of local investment groups. It was led by Virginia-based Razor’s Edge Ventures and Grotech Ventures, with participation from Maryland Venture Fund, Vienna’s Blu Venture Investors and Maryland’s Gula Tech Adventures.

Herndon-based NS8, which develops a SaaS solution to combat online fraud, raised $26 million in Series B financing. The round was led by New Jersey’s Edison Partners, with participation from Sorenson Ventures, Lytical Ventures, TDF Ventures, Hanna Ventures and others. It follows a previous $7.5 million seed round that closed in November 2017 and brings its total raised to nearly $40 million. The capital infusion will fuel NS8’s expansion in product innovation and channel development, CEO Adam Rogas said in a statement, and comes after a year of five-fold revenue growth.

Cyber startup NormShield is looking to expand after raising more than $3 million in new funding. The Tysons startup, which allows companies to quickly scan their security vulnerabilities, aims to grow from 18 to 40 full-time employees in 2019. The company brought in several executives in recent months, including Bob Maley, former PayPal head of security, as its chief security officer.

Vienna’s PFP Cybersecurity, which sells a sensor that monitors electromagnetic emissions coming from a microchip or device, is raising $2 million as part of what CEO Steven Chen called a bridge round. Another larger funding round will follow, and it’s building out a 12-person team. The company’s mission is to counter malware that embeds itself deep into networks or hardware and becomes difficult to detect. The startup has landed about $5 million in previous funding and is working on two $6 million contracts with the Defense Advanced Research Projects Agency.

Chevy Chase, Md.-based aerospace and defense investment firm Enlightenment Capital invested an undisclosed amount in System High Corp., a Chantilly, Va.-based cybersecurity and engineering provider with government and enterprise customers. It was Enlightenment’s second funding of a platform in four months, following its formation in October of government services company EverWatch.

Columbia, Md.-based cybersecurity startup Bandura Cyber, which developed what’s called the threat intelligence gateway along with the U.S. Department of Defense, expanded its Series A round to total more than $10 million of funding in 2018. The deal adds onto Bandura’s previously reported $4 million Series A round and a $3.5 million seed round earlier last year. The most recent capital injection was led by New York’s Tenfore Holdings with participation from Missouri’s Cultivation Capital and locally based Grotech Ventures and Gula Tech Adventures.

Fulton, Md.’s DataTribe is doubling down on its cyber-funding model, having raised $50 million in new commitments to invest in another 12 cybersecurity companies. As it did before, DataTribe will invest the funds in 60-90 days then embed executives with those companies and provide in-kind services like technology, rent, legal services and food. It also added two execs to its ranks: Maurice Boissiere, a serial data-focused startup founder, will join as chief customer officer and Leo Scott, a former founder of three tech companies, is coming in as chief innovation officer.

Hires

Publicly traded cybersecurity firm Tenable brought on industry veteran Terry Dolce to oversee global business development. He joined the Columbia, Md.-based company from Crowe LLP, an advisory firm where he oversaw governance, risk and compliance. As Tenable’s first senior VP of global business development and channels, Dolce will be responsible for growing its international profile – a major focus of the company’s post-IPO growth strategy.

Christopher Clark joined Alexandria’s King & Union, which makes a cybersecurity analysis platform, as chief technical officer.

Chantilly-based cyber startup Atomicorp bulked up its executive team with the addition of Charles Gold as chief marketing officer. Most recently, Gold was CMO at fast-growing encryption and data startup Virtru, where he helped the company grow to eight figures of annual revenue and 8,000 corporate customers in three years. Atomicorp also added to its ranks COO Lisa Brown, former CFO of digital consulting firm Siteworx.

Arlington-based Giant Oak, a provider of AI, machine learning and big data analytics for security in the government and financial services sectors, added Mike Cerick as chief revenue officer and Brian Spindler as VP of engineering. Cerick previously worked in critical infrastructure sales for the DoD, and Spindler has 15 years of experience in building SaaS products and managing engineering teams, according to the company. CEO Gary Shiffman said in a statement that Giant Oak, which was founded in 2012, has doubled in size in the last year and plans to do so again in 2019.

Acquisitions

Telecom giant Comcast acquired Arlington startup BluVector in an effort to grow the company’s cybersecurity business and build new technologies. BluVector, a spinout of Northrop Grumman, uses AI and machine learning to provide cybersecurity protection to public and private customers. As the new CEO of BluVector, Comcast appointed Eric Malawer, who served as cybersecurity staff director for the House Committee on Homeland Security and founded three of his own AI and security companies – Echelon, NextGen Venture Partners and DeepMile Networks.

Pasadena, Calif.-based Tetra Tech moved in to acquire Arlington’s eGlobalTech, bringing the local company into its government services arm. eGlobalTech, an IT, cybersecurity and management consulting firm, services the federal government using artificial intelligence, data science and cloud computing. Tetra Tech, which brought in nearly $3 billion in revenue last year, will absorb the contracts of its major clients, which include the Department of Health and Human Services, Department of Homeland Security and the General Services Administration.

Tysons-based Phacil, a provider of software and cybersecurity services to federal clients, was acquired by Arlington neighbor By Light Professional IT Services. The deal, terms of which were undisclosed, is one link in a string of IT industry consolidation through buying smaller cybersecurity shops. By Light bought another similar company, Axom Technologies, about a year ago.

Alexandria-based Dark Cubed, a developer of cybersecurity software for small and mid-sized companies, acquired Glen Allen, Va.-based Fenris, which offers similar services but focuses on highly regulated industries. Dark Cubed said the acquisition adds an experienced security operations team and eliminates the need for on-premise hardware and software.

Other Cybersecurity Moves

Silicon Valley-based cybersecurity firm FireEye, whose platform combines threat intelligence and consulting technologies, expanded its Northern Virginia presence by moving into a larger space in Reston Town Center. The company first came to the area in 2011 and now has 300 employees at the Reston operations center, with room to grow.

Baltimore startup SafteyPIN Technologies launched its flagship product, SafetyPIN, as it attempts to rewrite the rules of personal identification tech. The company allows individuals to be granted a certified badge following an approved background check that fosters credibility and privacy in industries susceptible to dishonest work, like babysitting, dog-walking and housework.