Cybersecurity Market Review - Momentum Partners [PDF]

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Cybersecurity Market Review Q4 2015 | Year End Advisors & Dealmakers In Cybersecurity.

Momentum Partners, LLC

•  Advise. Network. Invest.

Momentum Partners Advisors & Dealmakers In Cybersecurity. Why Momentum Partners?

Momentum’s Cybersecurity Team

Corporate Development





Founder Strategic and Capital Markets Advisor to CEOs, Founders & Boards

Founder Senior Advisor Cybersecurity Lead

Keith Skirbe Director

Dino Boukouris Director

Cybersecurity  Enterprise IT  Cloud & SaaS  Mobile Mergers & Acquisitions*

Eric McAlpine Managing Partner

Michael Tedesco Executive Chairman

We are a bespoke, next-generation advisory + networking + investment firm designed to serve and evolve with the Entrepreneur’s company – Series A to exit.

Strategic Advisor Mergers & Acquisitions Deep Cybersecurity Expertise

Strategic Advisor Start-up Advisor VC & Private Equity

Capital Raising*

Ecosystem Development

150+ Deals

$150+ Billion

Dealmakers in Security & Enterprise IT CLIENT

COUNTERPARTY

CLIENT

COUNTERPARTY

CLIENT

COUNTERPARTY Strategic Financing

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CLIENT

COUNTERPARTY

CLIENT

COUNTERPARTY

Thought Leadership Momentum’s Team Is Dedicated To Providing Thoughtful Research In Addition To Our Dealmaking & Advisory Services. Industry Research

Sector Research

Landscape Review

Active Dialogue & Strong Track Record With Cybersecurity Acquirers & Investors Including…

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Global Sector Coverage & Reach Relentless Coverage + Providing Meaningful Insights.

Executives

6 , 3 0 7

CISOs

1 , 5 1 1 0 , 4 1 7

Investors

Companies

Momentum’s Global Reach

0 , 3 5 9

Europe

Israel

East

West

APAC

LatAm

*** AS OF JANUARY 20, 2016 ***

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CYBERscape 2.0: Our Landscape Taxonomy The Security Sector Is Dynamic And Vast. We Are Ceaseless & Vigilant In Our Coverage. Infrastructure Security Network Firewall

Network Monitoring

Intrusion Prevention Systems

Unified Threat Management

IoT Security

Security Operations & Incident Response

Endpoint Security

Application Security

Endpoint Protection & Anti-Virus

WAF & Application Security

Endpoint Detection & Response

Vulnerability Assessment

Messaging Security

Web Security

Threat Intelligence

Mobile Security

Data Security

SIEM

Cloud Security

Security Incident Response Transaction Security

Specialized Threat Analysis & Protection

Risk & Compliance

Source: Momentum Partners.

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Identity & Access Management

Q4 Market Update And Observations What A Year Of Strategic Activity It Was In 2015. Q4 Was Another Very Busy Quarter For Strategic Moves. Exits: M&A & IPO Activity

Investment Activity

Valuations

Industry Observations

§  The cybersecurity M&A market continued at a record pace in 2015, totaling 142 transactions, representing a 61% increase over the five-year low-point in 2012 §  There were several large notable M&A transactions during Q4 – Elastica ($280M), Lancope ($453M), TippingPoint ($300M) and Vormetric ($400M) §  Mimecast priced during Q4 ($10/share); Dell Secureworks and Veracode remain on file and Tenable Network Security and Tanium are on IPO watch §  Q4 saw a surge in large rounds yet again with eight companies raising $50M+, of which three raised at least $75M – Forescout ($75M), Tenable Network ($250M), Code42 ($86M) §  2016 could be a golden era of cybersecurity investing with ample capital and an increasing threat landscape; however, some are predicting a measured slow-down leaving a slew of Seed/Series A funded companies without a Series B sponsor…and in desperate need of a ‘home’ §  There were some notable declines during Q4 – our High Growth Security comps were -7% during Q4 and +18% YTD while our Low Growth Security comps were +6% during Q4 and -9% YTD, relative to the NASDAQ which was +8% during Q4 and +6% YTD §  Rapid7, Sophos and Mimecast were trading -5%, +9%, and -4% relative to their IPO price, respectively, at the end of Q4 §  Threat Intelligence in the spotlight during the quarter – M&A and significant capital raise activity §  Spending on cybersecurity totaled an estimated $77 Billion for 2015 and projected to reach $170 Billion in 2020, but is it sufficient? Organizations spent another $491 Billion recovering from attacks in 2015 – 6x the spend to thwart them §  Predictions abound for 2016 – buzz words too – IoT, ransomeware, hacktivism, autonomic defense, user behavior monitoring, machine learning, adversary intelligence, cyberwar (?!)

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Top 5 Movers in Q4

35%

33% 27%

36%

20%

Strategic Activity In 2015 M&A & Venture Capital Remained Strong While IPOs Were Not Immune To Market & Economic Pressures.

12/15:$35M/1.9x

Selected Acquisition Activity

Selected VC Activity

Equity

(Date: Implied Enterprise Value / LTM Rev Multiple)

(Date: $ Raised / Pre-$ Valuation / Funding Stage)

(Date: $ Raised)

11/15:$150M/NA

11/15:$280M/NA

12/15:$50M / NA / C

10/15:$453M/NA

12/15:$27M / $43M / B

11/15:$20M / $60M / B

11/15: IPO: $78M

10/15:$300M/1.8x

10/15:$65M/3.2x

10/15:$400M/7.5x

10/15:$71M/NA

10/15:$116M/10.3x

11/15:$250M / NA / B

10/15:$33M / NA / A

10/15:$15M / $55M / B

9/15:$290M/NA

9/15:$425M/2.0x

7/15:$190M/NA

9/15:$75M / $1.1B / F

9/15:$75M / $275M / D

8/15:$52M / $380M / E

9/12: Series C: $62M 1/10: Series B: $21M 12/08: Series A: $8M

$91M

7/15: IPO: $103M

6/15:$635M/NA

6/15:$22M/NA

6/15:$20M/NA

5/15:$60M/NA

7/15:$42M / $249M / C

7/15:$100M / $567M / C

7/15:$18M / NA / B

4/15:$200M/3.3x

4/15:$1.9B/NA

4/15:$786M/3.6x

4/15:$80M/NA

6/15:$30M / $122M / C

4/15:$100M / $900M / C

3/15:$11M / NA / A

12/14: Series D: $30M 11/11: Series C: $50M 2/10: Series B: $2M 9/08: Series A: $7M

$89M

6/15: IPO: $553M 5/02: Minority: $60M 9/98: Venture: $4M

3/15:$2.4B/NA

3/15:$43M/NA

3/15:$32M/NA

1/15:$85M/NA

2/15:$35M / $185M / B

Source: Capital IQ, 451 Group, Crunchbase, TechCrunch. Momentum Partners maintains a proprietary Security M&A deal database.

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2/15:$15M / NA / B

1/15:$40M / NA / C

$64M

Notable M&A Transactions Cybersecurity Continued To Remain A Key Strategic Priority For IT & Non-IT Buyers.

Acquires

Ent. Value / Rev: NA Date: 10/27/15 Ent. Value / EBITDA: NA Ent. Value: $453M Amount Raised: $24.6M

Acquires

Ent. Value / Rev: 7.5x Date: 10/19/15 Ent. Value / EBITDA: NA Ent. Value: $400M Amount Raised: $45.0M

§  Founded in 2000, Lancope focuses on behaviour analytics, threat visibility and security intelligence to detect malicious activity on corporate networks §  Lancope highly complements Cisco’s cybersecurity strategy “highlighting the network as an infosec sensor and enforcer”, and is already integrated with Cisco tech for network profiling and enforcement §  Marked Cisco’s fourth security deal in previous 12 months – OpenDNS ($635M), Neohapsis and Portcullis

Acquires

§  Founded in 2012 and launched in 2014, Elastica’s CloudSOC platform is rated for its ability to provide visibility, threat detection and prevention, data governance and post incident analysis to cloud applications. Capabilities are delivered via CASB gateway and API controls §  This marks the second major purchase in the CASB market by Blue Coat, having acquired PerspecSys in July 2015

Date: 11/9/15 Ent. Value / Rev: NA Ent. Value: $280M Ent. Value / EBITDA: NA Amount Raised: $36.3M

§  Founded in 2001, Vormetric provides a Data Security Platform that protects any file, any database and any application’s data – anywhere it resides (physical, big data and cloud environments) §  Vormetric had 200 employees and over 1,500 enterprise clients, including 17 of the top 30 U.S. companies §  Acquisition accelerates Thales’ cybersecurity initiatives; Vormetric will be integrated into Thales e-Security which already protects network data for 19 of 20 largest world banks

Acquires

Ent. Value / Rev: 10.3x Date: 10/09/15 Ent. Value / EBITDA: NA Ent. Value: $116M Amount Raised: Self-Funded

Source: Capital IQ, PitchBook Data, CrunchBase.

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§  Blue Coat has invested $500M+ in organic and inorganic development in recent years to expand its cloud security capabilities §  Founded in 2008, LastPass is a provider of password management software with 7 million users across both the consumer and enterprise market §  LastPass will better position LogMeIn in the identity and access management market, which represents one of LogMeIn’s top three strategic growth initiatives §  As part of the transaction, another $15M is available in contingent payments if LastPass meets certain milestone and retention targets over the two years post-acquisition

A Closer Look at Recent Cybersecurity Exits Breaking Down The Cybersecurity Exits In 2014 And 2015. Last Round Prior to Exit

Time to Exit

Observations

10% 15% 13%

Seed

< 2 years

Series A 14%

34%

25%

Series B

45%

2 to 5 years

19%

5 to 10 years

Series C

§  Just under a third of companies exited prior to turning 5 years old -  ‘Quick flips’ are not the norm

Note: Excludes self-funded companies.

Total $ Raised Prior to Exit

Deal Size

§  Just over half of cybersecurity exits are $50M or below

6% 12%

$1M - $10M 46%

26%

$10M - $20M

$0 - $50M 25%

$20M - $50M 15%

Note: Excludes companies that raised $10 Million Have Substantially Risen Since January 2014. Investment Date

Selected Investor(s)

16-Dec-15

Danhua Capital, Linear Capital Partners, Sparkland Ventures, Trust Bridge Partners

Trustlook develops a static analysis platform for detecting suspicious behavior and malicious characteristics for Android operating systems.

16-Dec-15

Brookline Venture Partners, Fairhaven Capital Partners, GE Pension Trust, LLR Partners

Digital Guardian provides data security solutions to protect data from insider and outsider threats.

15-Dec-15

American Express Ventures, BDC Venture Capital, Blumberg Capital, Tenfore Holdings

Trulioo provides online portal for identity verification services.

11-Dec-15

Alsop Louie Partners, Neuberger Berman, NewSpring Capital

Lookingglass Cyber Solutions develops cyber threat intelligence monitoring and management platforms.

9-Dec-15

Amadeus Capital Partners, Aspect Venture Partners, Bain Capital Ventures

ForeScout enables organizations to continuously monitor and mitigate security exposures and cyber attacks.

3-Dec-15

Core Capital Partners, Genacast Ventures, Highland Capital Partners, NEA

ZeroFOX provides real-time social threat analytics, intelligence, and advanced security protection via its cloud-based cyber platform.

2-Dec-15

JMI Equity

Avecto's Defendpoint software protects endpoints from malware and cyberattacks through privilege management, application control and sandboxing technology.

2-Dec-15

Blu Venture Partners, NEA, Center for Innovative Technology

ThreatQuotient offers a software platform that helps security teams mitigate cyber attacks by aggregating and managing intelligence on threats.

1-Dec-15

Grotech Ventures, SAP National Security Services

ThreatConnect provides a cyber threat intelligence platform that allows global organizations to manage massive amounts of threat information.

1-Dec-15

Alibaba, GE Ventures, Jérusalem Venture Partners, Poalim Ventures

Theta Ray offers malware detection and prevention solutions for critical infrastructure, communication systems, and financial systems.

20.0

17-Nov-15

Arsenal Venture Partners, Crosslink Capital, Paladin Capital, Tola Capital, Trinity Ventures

ProtectWise offers cloud-based network security services.

20.0

11-Nov-15

Menlo Ventures, Jerusalem Venture Partners, OurCrowd, Draper Nexus

AppDome’s dynamic wrapping SaaS technology provides shield to enterprise and consumerfacing apps from advanced cyber threats, mobile fraud, and data theft.

Company

Business Description


29

Amount Raised ($M)

17.0 66.0 10.9 50.0 75.4 27.0 49.0 10.2 16.0

13.0

Venture Capital Activity Venture Capital Raises >$10 Million Have Substantially Risen Since January 2014. Investment Date



Amount Raised ($M)

11-Nov-15

Norwest Venture Partners, Invus Group, Accolade Partners, Shasta Ventures

TigerText provides security software for text messaging for physicians to use on their mobile devices.

50.0

10-Nov-15

Insight Venture Partners, Accel Partners

Tenable Network Security specializes in developing software that enables real-time network monitoring to detect hackers and other malicious actors.

9-Nov-15

Costanoa Ventures, Foundation Capital, Split Rock Partners, Triangle Peak Partners

Guardian Analytics is provider of fraud prevention software for protecting online channels and accounts.

3-Nov-15

Goldman Sachs

iboss Cybersecurity provides innovative APT Defense, Web Security and Mobile Security Solutions.

2-Nov-15

Foundation Capital, Matrix Partners, Northbridge Venture Partners

Confer provides endpoint detection and response solution (EDR) that proactively identifies attacks and provides real-time visibility across all endpoints.

17.0

30-Oct-15

Merck Global Health Innovation Fund

Exostar develops B2B information sharing software.

15.0

29-Oct-15

Undisclosed

Lumeta provides network situational awareness platform which is source for enterprise network infrastructure and cybersecurity analytics.

13.0

27-Oct-15

Aspect Venture Partners, US Venture Partners

Cato Networks provides cloud-based platform to manage multiple hardware and software products and provide security against hacking, data theft and other security problems.

20.0

27-Oct-15

Index Ventures, Storm Ventures

SourceClear develops software security platform for developers that help organizations identify components across software portfolio.

10.0

25-Oct-15

Trident Cybersecurity, KPCB

IronNet Cybersecurity provides suite of technologies that provide real-time threat assessment and updates and consulting services.

14-Oct-15

Allegis Capital, Cowboy Ventures, KPCB, First Round Capital, Icon Ventures

Area 1 Security provides campaign delivery systems and allows enterprises to identify cyber attacks and other attacking campaigns before they unfold using their anti phishing platform.

14-Oct-15

.406 Ventures, Accomplice VC, Agman Partners, Evolution Equity Partners

Bit9 provides endpoint threat detection, response, and prevention solutions to detect and stop cyber threats.

Company


30

250.0 10.9 35.0

32.5 15.0 54.5




Amount Raised ($M)

13-Oct-15

GSR Ventures, NEA

DataVisor provides big data security analytics to help protect consumer-facing websites and mobile apps from cyber criminals.

14.5

13-Oct-15

Charles River Ventures, Softbank, Spark Capital

Cybereason delivers a technology platform that automatically uncovers malicious operations, reconstructing them as a clear image of a cyberattack in context.

7-Oct-15

Granite Hill Capital Partners, SineWave Ventures, The Data Collective, Third Point

Sentinel Labs provides monitoring technology to protect workstations and mobile phones from threats.

6-Oct-15

Accel Partners, JMI Equity, NEA, Split Rock Partners

Code42 Software provides secure cloud services for endpoint data protection and security that allow their users to limit risk, meet data privacy regulations, and recover from data loss.

30-Sep-15

KPMG

Norse delivers continuously-updated and unique Internet and darknet intel that helps organizations detect and block attacks.

29-Sep-15

DAG Ventures, AME Cloud Ventures, Juniper Networks, Intel Capital, IA Ventures, Accel

Vectra Networks’ X-series platform uses next-gen compute architecture and combines data analytics and machine learning to detect attacks.

29-Sep-15

Icon Ventures, Aspect Ventures, Shlomo Kramer, Norwest Venture Partners

Exabeam offers machine-learning technology that focuses on cyber attacker behavior to detect modern cyber attacks.

25-Sep-15

Arsenal Venture, EDB Investments, Fairhaven Capital Partners, Ten Eleven Ventures

CounterTack provides real-time endpoint threat detection and response solutions to enterprises and government organizations.

22-Sep-15

Baidu, Fidelity Management, Qualcomm Ventures, Microsoft, NEA, Google, Venrock

CloudFlare is a web performance and security company that provides online services to protect and accelerate websites online.

21-Sep-15

Orchard Holdings Group

Morphick team has developed the only proven platform-enabled managed service to enable their customers to prevent, detect, and respond to even the most advanced attacks.

17-Sep-15

Tano Capital

Tascent develops and deploys biometric identity products and solutions based upon a strong heritage in iris recognition and multimodal high throughput and mobile biometrics.

10-Sep-15

Allianz Digital, Vertex Venture Capital, Magma Venture, SBI Holdings, Magna International

Argus is an automotive cybersecurity pioneer, helping car manufacturers, their Tier I suppliers and aftermarket connectivity providers protect connected cars from car hacking.

Company


31

59.0 25.0 85.6 11.4 35.1 25.0 17.9 108.7 10.0 18.5 26.0



10-Sep-15

IVP, TPG, Andreessen Horowitz, T. Rowe Price

Tanium provides security and systems management solutions to allow real-time data collection.

8-Sep-15

Andreessen Horowitz, Greylock, Sequoia, Altimeter Capital, Glynn Capital, Khosla

Okta is an integrated identity and mobility management service.

75.0

3-Sep-15

ICONIQ, Accel Partners, Lightspeed, Social +Capital Partnership

Netskope performs deep usage analytics and enforces business and security policies in cloud apps.

75.0

2-Sep-15

Bessemer Venture Partners, Citi Ventures, Innovation Endeavors, Marker, NEA

Illusive networks offers deception technology enabling protection against targeted attacks and APTs.

22.0

25-Aug-15

.406 Ventures, Arsenal Venture Partners, Evolution Equity Partners

Onapsis provides solutions for securing business-critical applications and infrastructure.

17.0

24-Aug-15

Bessemer Venture Partners, Thomas Noonan

Bastille is pioneering IoT security with next-generation security sensors and airborne emission detection, allowing corporations to accurately quantify risk and mitigate threats.

13.8

19-Aug-15

Benchmark, Meritech Capital, Shasta Ventures, Tenaya Capital, Lightspeed, Musea

CloudPassage provides server security products for public and hybrid cloud hosting environments.

18-Aug-15

IVP, GGV Capital, KPCB, Trident Capital

AlienVault’s Unified Security Management Platform delivers a unified, simple and affordable solution for threat detection, incident response and compliance management.

3-Aug-15

Google Capital, TPG Capital, EMC, Lightspeed Venture Partners

Zscaler offers integrated, cloud-delivered Internet security including web security, firewalls, mobile security, IoT security and DLP.

28-Jul-15

DFJ Growth, Dell Ventures, KKR, Blackstone, Thomvest, Khosla, Draper Nexus, TenEleven

Cylance utilizes artificial intelligence, algorithmic science and machine learning to proactively protect organizations against advanced threats.

24-Jul-15

Accelerate IT Ventures, Trident Capital, Panasonic Venture Group

Mocana creates and develops mobile application protection (MAP) app-shielding solutions, enabling users to secure mobile apps.

14-Jul-15

Summit Partners

Darktrace’s Enterprise Immune System technology detects unidentified threats in real time, powered by machine learning and mathematics developed at the University of Cambridge.

Company



32

Amount Raised ($M)

147.5

35.9 52.0 110.0 42.0 14.8 25.0



Company


Amount Raised ($M)

13-Jul-15

Accel Partners, Google Capital, Rackspace, Warburg Pincus

CrowdStrike is a global provider of security technology and services focused on identifying advanced threats and targeted attacks.

13-Jul-15

Allegis Capital, Marc Benioff, Blackstone, Igor Sill, Kevin Plank, Christian Lawless

RedOwl Analytics provides proactive risk oversight software solutions for compliance, insider threat & investigations.

1-Jul-15

Pinnacle Ventures, Redpoint Ventures, Quihoo 360 Technology

PSafe is a Brazilian company developing Secure Cloud Computing software suites such as the PSafe Antivirus for safe internet browsing.

25-Jun-15

Insight Venture Partners

CheckMarx.com develops software solutions that are used to identify security vulnerabilities in Web and mobile applications.

24-Jun-15

Benchmark, New Enterprise Associates, Marc Benioff, David Sacks, Drew Houston

HackerOne provides a vulnerability management and bug bounty platform.

24-Jun-15

New Enterprise Associates, Sigma Prime Ventures

Barkly uses high-performance local analytics and a unique design to stop attacks in the moment while preventing tampering from users and attackers.

18-Jun-15

Bessemer Venture Partners, Correlation Ventures, IDEA Fund Partners, Techstars

Distil’s SaaS bot detection and mitigation solutions work like a protective shield and block malicious bots, malware and competitors’ that try to scrape websites without permission.

9-Jun-15

Intel Capital, QuestMark Partners, Silver Lake Partners

Venafi provides enterprise key and certificate management security solutions.

8-Jun-15

Engineering Capital, General Catalyst, Osage University Partners, Sutter Hill Ventures

Menlo Security is a stealth cyber security company that develops security solutions eliminating the threat of advanced malware.

25.0

1-Jun-15

Foundation Capital, Matrix Partners, Sapphire Ventures, Trinity Ventures, Chris Rust

Cyphort develops cloud services, software, and appliance-based solutions to protect enterprises against the newest cyber threats.

30.0

28-May-15

Excel Venture Management, Flare Capital, Heritage Group, HLM Venture, NVP, Merck

ClearDATA offers security, privacy, and compliance services to the hospitals, physician practices, electronic medical record software, and healthcare markets.

25.0

20-May-15

Carmel Ventures, Lightspeed Venture Partners

enSilo offers a real-time targeted attack exfiltration prevention platform.


33

100.0 17.5 30.0 84.0 25.0 12.5 21.0 39.0

10.0



19-May-15

China Broadband Capital Partners, China Growth Capital, IDG Capital Partners

FraudMetrix provides network risk and fraud services, serving institutional clients in the banking, third party payment, credit dealers and gaming industries.

19-May-15

Andreessen Horowitz, Corazon Capital

Keybase allows users to easily encrypt, decrypt and share messages within a tried-and-tested encryption standard.

18-May-15

Espírito Santo Ventures, Oak HC/FT, Sapphire Ventures

Feedzai provides a platform that uses real-time, machine-based learning to help payment networks, banks and retailers prevent fraud in omnichannel commerce.

18-May-15

Comcast Ventures, Commonwealth Capital, Flybridge Capital, Globespan Capital

BitSight provides a security rating platform, which analyzes external data on security behaviors that allows to manage third party risk, and benchmark performance.

23.0

6-May-15

Spark Capital, CRV, Lockheed Martin

Cybereason delivers a technology platform that automatically uncovers malicious operations, reconstructing them as a clear image of a cyberattack in context.

25.0

16-Apr-15

Reed Elsevier Ventures, Atlas Venture, Balderton Capital, GV, IA Ventures, In-Q-Tel

Recorded Future arms organizations with real-time threat intelligence, allowing them to proactively defend against cyber attacks.

15-Apr-15

Index Ventures, Intel Capital, Sutter Hill Ventures

Skyport Systems develops enterprise security and hyper-secured infrastructure solutions for critical IT and corporate assets.

30.0

14-Apr-15

HP Ventures, Index Ventures, Sequoia Capital, Rembrandt

Adallom is a cloud access security broker which delivers visibility, governance and protection for cloud applications.

30.0

14-Apr-15

Accel Partners, Andreessen Horowitz, BlackRock, General Catalyst, Formation 8

llumio provides cloud solutions, specializing in virtualization, networking, and security hailing services.

9-Apr-15

Venrock, Index Ventures, New Enterprise Associates

Niara's solution blends diverse data sources, sophisticated analytics and forensics to discover compromised users, provide insight into malicious insiders.

8-Apr-15

Andreessen Horowitz, Citi

Tanium provides security and systems management solutions to allow real-time data collection.

6-Apr-15

DRW Investors, Icon Ventures, Leapfrog Ventures, Math Venture Partners

RedSeal develops security risk management (SRM) software and solutions and helps companies eliminate cyber threats.

Company



34

Amount Raised ($M)

30.0 10.8 17.5

12.0

100.0 20.0 64.0 17.0



Company


Cisco, EPIC Ventures, Trident Capital, Vanedge Capital, Vmware, AITV, Fortinet

HyTrust, a cloud security automation company, provides administrative control, auditing, & data security for private, hybrid, and public clouds.

26-Mar-15

AITV, Cisco, EPIC Ventures, Fortinet, Granite Ventures, and others

PhishMe provides training to employees against phishing threat enabling them to identify, report, and mitigate spear phishing, malware and drive-by threat.

26-Mar-15

Accel Partners, Flybridge Capital Partners, Greycroft Partners, Millenium Technology

BetterCloud provides critical insights, automated management, and intelligent data security for cloud office platforms.

25-Mar-15

Neuberger Berman Group, Alsop Louie Partners

Lookingglass Cyber Solutions develops cyber threat intelligence monitoring and management platforms.

24-Mar-15

Bain Capital Ventures, Commerce Ventures, Lightspeed Venture Partners

InAuth is the most complete mobile authentication and anti-fraud solution offering multiple security options to financial institutions and the mobile transaction market.

20-Mar-15

August Capital, Engineering Capital, Norwest Venture Partners, Wing Venture Partners

Palerra provides software that combines threat detection, predictive analytics, security configuration management and automated incident response & remediation in one platform

19-Mar-15

ONSET Ventures, Voyager Capital, Presidio Ventures, LDV Partners, Envision Ventures

Vidder mitigates network-based attacks by making servers invisible to everyone except authorized users.

19-Mar-15

Benchmark Capital, GV, Lead Edge Capital, Radar Partners, Redpoint Ventures, others

Duo Security provides two-factor authentication as a service to prevent account takeover and data theft.

18-Mar-15

Invoke Capital, Hoxton Ventures, Talis Capital

Darktrace, a cyber security company, offers intelligence-led behavioral cyber defense solutions for cyber-attack vectors.

10-Mar-15

Allegis Capital, March Capital Partners, The Hive

E8 Security helps enterprises analyze and detect advanced attacks and malicious insider activities.

26-Feb-15

Undisclosed

Silent Circle is a global encrypted communications service that provides cutting-edge encrypted text, e-mail, mobile phone and video teleconferencing services.

26-Feb-15

Sierra Ventures, Samsung Ventures, Telstra Ventures, Lazarus Israel, Toyo Corporation

Zimperium, a mobile cyber security company, develops Mobile Intrusion Prevention System.

1-Apr-15


35

Amount Raised ($M)

33.0 13.0 25.0 20.0 23.5 17.0 12.0 30.0 18.4 10.7 50.0 12.0



25-Feb-15

Rogers Venture Partners, Blue Sky Capital

SecureKey develops platform-as-a-service based hardware and software solutions for chip-based identity and payment technologies.

18-Feb-15

Institutional Venture Partners, Andreessen Horowitz, Felicis Ventures, Redpoint, Citi

Pindrop Security provides caller-ID products to detect, report, and mitigate phone fraud.

17-Feb-15

BOLDStart Ventures, Evolution Equity Partners, Sequoia Capital

SecurityScorecard is a provider of security risk assessment service for cloud-based information systems.

10-Feb-15

Alcatel Lucent, Bessemer Venture Partners, Cisco, Innovation Endeavors, Marker

Team 8 is an incubator for cyber-security firms with specialty in defending against targeted, human-driven cyber-attacks

10-Feb-15

83North, Bessemer Venture Partners

Wandera provides security and management of mobile data for global enterprises.

26-Jan-15

Bessemer Venture Partners, Columbia Capital

Verato helps rightly identifying individuals regardless of whether their names, addresses or other personal information was incorrect or out-of-date.

16-Jan-15

Avalon Ventures, NHN Investment Corp

Air Computing cloud platform AeroFS allows enterprise customers to synch and share all data securely behind a firewall with unlimited storage.

13-Jan-15

KPCB, Meritech Capital Partners, Icon Ventures, Google Ventures, TechOperators

Ionic Security offers a unified data and mobility security platform.

31-Dec-14

Bessemer Venture Partners

iSight Partners provides cyber threat intelligence solutions to public sector and commercial entities in the United States.

19-Dec-14

KPCB, Google Ventures, Greylock Partners, GGV Capital, Icon Ventures

Synack provides a cloud-based platform that enables customer data integrity, privacy, and confidentiality.

25.0

16-Dec-14

Charles River Ventures, Scale Venture Partners, Social+Capital Partnership

OneLogin's cloud-based Identity and Access Management solution allows enterprises of all sizes to secure their cloud and on-premise apps for all users and devices.

25.0

16-Dec-14

ATA Ventures, Northgate Capital, RWI Ventures, TVC Capital

EdgeWave engages itself in the design, development and marketing of internet security appliances, services and offers secure content management and policy compliance services.

Company



36

Amount Raised ($M)

19.0 35.0 13.7 18.0 15.0 12.5 10.0 40.1 30.0

13.0



16-Dec-14

Technology Crossover Ventures, Bain Capital Ventures

Rapid7 provides vulnerability management and security data and analytic software solutions and services.

9-Dec-14

Grotech Ventures, Khosla Ventures, Citi Ventures

DB Networks provides behavioral analysis solutions for intrusion detection and database security.

17.0

9-Dec-14

DCM, DDS, DoCoMo Capital, ONSET Ventures, Raven Venture Partners and others

Nok Nok Labs develops products and services for online security and authentication.

16.3

8-Dec-14

Summit Partners, Battery Ventures, Florence Venture Partners

RiskIQ provides a software-as-a-service product that eliminates online and mobile threats.

8-Dec-14

Auriga Partners, VI Partners, Mannai Corp

Nexthink is the innovator of End-user IT Analytics for security, ITSM and workplace transformation.

4-Dec-14

Palladin Capital, Google Ventures, IVP, General Catalyst Partners

ThreatStream’s Optic platform is a security intelligence solution that aggregates millions of threat indicators into existing security systems.

19-Nov-14

T-Venture, Delta Partners, Andreessen Horowitz, Transamerica Ventures

CipherCloud provides cloud information protection solutions.

19-Nov-14

Bessemer, Columbia Capital, KPCB, Paladin Capital, Top Tier, Edgemore Capital, Savano

Endgame provides security intelligence and analytics solutions for real-time visibility and actionable insight across their digital domains.

18-Nov-14

Osage Partners, General Catalyst Partners

Menlo Security, a stealth cyber security company, develops a security solution that eliminates the threat of advanced malware.

10.5

18-Nov-14

IPV Capital, ANT Financial

V-Key provides mobile application threat research, protection, and intelligence solutions.

12.0

11-Nov-14

NEA, Sequoia Capital

Forter provides a software to reduce frauds during transaction.

15.0

31-Oct-14

Battery Ventures, Amplify Partners, Chris Rust, Nick Mehta

Veradocs, a data-security company, secures and shares digital information across platforms and devices.

Company



37

Amount Raised ($M)

31.0

27.5 14.5 22.5 50.0 30.0

10.0



22-Oct-14

Benhamou Global Ventures, Javelin Venture Partners, Lakewood & Co, Vital Venture

Spikes Security provides browser-based security software solutions to businesses.

12.0

30-Sep-14

NTT DoCoMo Ventures, Octopus Investments, Paladin Capital

Certivox provides application and content security, as well as on-demand encryption key generation services.

11.3

30-Sep-14

Draper Fisher Jurvetson, MeriTech Capital Partners

Good Technology Corporation provides secure mobility solutions for enterprises and governments worldwide.

30-Sep-14

Pelion Venture Partners, Third Point Ventures, Akamai Technologies

Krimmeni Technologies manufactures, markets, and licenses data security systems for device manufacturers and content providers.

23-Sep-14

Alloy Ventures, Battery Ventures, Scale Venture Partners, First Round Capital

Agari Data provides email security solutions.

15.0

22-Sep-14

Benchmark Capital, True Ventures, Radar Partners, Google Ventures

Duo Security provides two-factor authentication as a service to prevent account takeover and data theft.

12.8

18-Sep-14

DFJ, KKR, Sapphire Ventures, General Catalyst, Volition Capital, Ten Eleven

Ping Identity Corporation provides cloud identity security and management solutions.

16-Sep-14

Cisco, Edison Partners, Georgian Partners, Northleaf Capital Partners, VentureLink

eSentire has reinvented enterprise network security by focusing on protecting your core assets inside the network through our human driven, behavior-based solution.

11-Sep-14

Wellington Management, .406 Ventures, Atlas Venture, Meritech Capital, In-Q-Tel, Polaris

Veracode offers a cloud-based application security platform for managing enterprise-wide governance programs

10-Sep-14

Battery Ventures, Glilot Capital Partners, Amplify Partners

Light Cyber develops solutions for identifying and preventing cyber-attacks and advanced persistent threats.

20-Aug-14

Citi Ventures, Columbus Nova Technology Partners, Work-Bench

vArmour Networks provides software-defined security solutions for virtualized data centers and government cloud operators.

18-Aug-14

Battery Ventures, 83North

GuardiCore provides network security solutions for software-defined data centers.

Company



38

Amount Raised ($M)

80.0 11.7

35.0 12.7 40.0 10.0 21.0 11.0



13-Aug-14

Accel, Goldman Sachs, Index Ventures, T.Rowe Price, A16, Khosla, Wellington, Bezos

Lookout develops and delivers cloud-based consumer mobile device security applications for iPhones and iPads.

13-Aug-14

China Broadband Capital Partners, Linear Venture, IDG Capital Partners

FraudMetrix provides network risk and fraud services, serving institutional clients in the banking, third party payment, credit dealers and gaming industries.

10.0

12-Aug-14

Dell Ventures, Presidio Ventures, Redpoint Ventures, eVentures

Lastline provides cloud-based systems and processes for the analysis of malware.

10.0

6-Aug-14

Sequoia Capital, Tenaya Capital, Nexus Venture Partners

Druva Software provides data protection and governance solution for public and private clouds in an enterprise.

6-Aug-14

Toba Capital

SecureAuth is a technology leader in universal identity enforcement for mobile devices, cloud applications and networks.

5-Aug-14

New Enterprise Associates, Norwest Venture Partners, SingTel Ventures

Bitglass provides security solutions that automatically segments, tracks, and secures businesses’ sensitive data across cloud and mobile.

25.0

5-Aug-14

Accel Partners, Intel Capital, Khosla Ventures, Juniper, AME Ventures, IA Ventures

Vectra Networks’ X-series platform uses next-gen compute architecture and combines data analytics and machine learning to detect attacks.

25.1

29-Jul-14

Jerusalem Venture Partners, Poalim Ventures

Theta Ray offers malware detection and prevention solutions for critical infrastructure, communication systems, and financial systems.

10.0

25-Jul-14

Baird Venture Partners, Jump Capital, Math Venture Partners

NowSecure develops and provides mobile security solutions for the financial, healthcare, and governmental institutions.

12.5

23-Jul-14

ABS Capital Partners, Signal Peak Ventures

Bask Technology provides remote technology and proactive maintenance services for private homes and small businesses in the United States and internationally.

17.8

22-Jul-14

Riverwood Capital, Adams Street Partners, Access Venture Partners, Piper Jaffray

LogRhythm provides log management and security information and event management solutions.

22-Jul-14

Frontier Capital

InteliSecure provides a portfolio of information and network security services to help organizations protect their most critical assets.

Company



39

Amount Raised ($M)

150.0

25.0 10.0

40.0 14.3



Company


Amount Raised ($M)

10-Jul-14

Highland Capital Partners

Malwarebytes develops anti-malware technologies to detect and remove malicious programs from PCs.

4-Jul-14

Adams Street Partners, March Capital Partners, Summit Partners, Telstra Ventures

Telesign provides mobile identity solutions.

27-Jun-14

Mayfield Fund, Pelion Venture Partners, Third Point Ventures

Elastica provides cloud security solutions for businesses and their employees.

25-Jun-14

Alsop Louie Partners, Breyer Capital, CME Ventures, Dolby Family Ventures

Wickr develops a mobile messaging platform that specializes in offering data security services.

24-Jun-14

Grotech Ventures, Paladin Capital

White Ops detects bots, in real time, at web scale.

23-Jun-14

Sequoia Capital, Salesforce Ventures, Greylock Partners

Skyhigh Networks enables companies to adopt cloud services with appropriate security, compliance and governance.

22-Jun-14

Andreessen Horowitz

Tanium provides security and systems management solutions to allow real-time data collection to enterprises and Fortune 500 customers.

19-Jun-14

Accel Partners, Foundation Capital, Meritech Capital Partners

ForgeRock creates identity relationship management solutions for the modern Web including public cloud, private cloud, hybrid cloud, and enterprise and mobile environments.

16-Jun-14

Arsenal Venture Partners, Fairhaven Capital, Lucent Asset Management, Goldman Sachs

CounterTack provides real-time endpoint threat detection and response solutions to enterprises and government organizations.

16-Jun-14

Redpoint Ventures, Founders Fund, Bridgescale, Radar Partners, A-Grade

BitGo operates a Bitcoin security platform that offers multi-signature security-as-a-service solutions.

12.0

10-Jun-14

Norwest Venture Partners, Aspect Ventures, Shlomo Kramer

Exabeam offers machine-learning technology that focuses on cyber attacker behavior to detect modern cyber attacks.

10.0

10-Jun-14

Crosslink Capital, Trinity Ventures, Paladin Capital, Arsenal Venture

ProtectWise offers cloud-based network security services.

14.1


40

30.0 49.4 20.0 30.0 11.1 40.0 90.0 29.9 20.0



Company


Amount Raised ($M)

9-Jun-14

Altimeter Capital, Andreessen Horowitz, Greylock Partners, Janus Capital

Okta is an integrated identity and mobility management service.

2-Jun-14

Blumberg Capital, Intel Capital, Swarth Group

Fortscale Security develops data security systems which analyzes information and tracks patterns of potential security threats.

10.0

28-May-14

Bessemer Venture Partners, Correlation Ventures, IDEA Fund Partners, Techstars

Distil’s SaaS bot detection and mitigation solutions work like a protective shield and block malicious bots, malware and competitors’ that try to scrape websites without permission.

10.1

21-May-14

Cain Capital, Ross Perot

Silent Circle is a global encrypted communications service that provides cutting-edge encrypted text, e-mail, mobile phone and video teleconferencing services.

20-May-14

Samsung Venture, Fortinet, DoCoMo Capital, Accel, Mayfield, Northgate, BDCA Venture

Centrify Corporation provides unified identity management across data center, cloud, and mobile.

15-May-15

Accel Partners, Lightspeed, Social+Capital Partnership

Netskope performs deep usage analytics and enforces business and security policies in cloud apps.

35.0

15-May-14

Glynn Capital, Mohr Davidow, Greylock, Sequoia Capital, Cisco, Lumia, Sutter Hill

OpenDNS operates as a security company that provides Internet security and domain name system services to secure the networks.

35.0

15-May-14

Bank of Montreal, Business Development Bank of Canada

BlackRidge helps in authenticating and authorizing all network connections before they are established, stopping malicious attacks that would bypass conventional security measures.

20.2

14-May-14

First Round Capital, Max Levchin, Spark Capital, Union Square Ventures

Sift science provides of a platform that monitors website traffic to alert clients of fraudulent activity.

18.1

14-May-14

Spectrum Equity

Verafin is a leading provider of compliance, anti-money laundering (AML) and fraud detection software.

29-Apr-14

NEA, Core Capital, Genacast Ventures, Enrique Salem, Comcast Ventures, TCP

ZeroFOX provides real-time social threat analytics, intelligence, and advanced security protection via its cloud-based cyber platform.

10.3

23-Apr-14

Accel Partners, Tiger Global, Westly Group, Granite Hill Capital, Data Collective

SentinelOne helps enterprises stop targeted attacks with automatic mitigation and provides realtime forensics across multiple platforms.

12.0


41

75.0

30.0 42.0

55.1



22-Apr-14

Adams Street Partners, Blumberg Capital, GRA Venture Fund, Imlay Investments

Damballa discovers active threats that bypass all security prevention layers.

16-Apr-14

The Stephens Group, Treetop Ventures

Armor offers customer-centric security outcomes for retail and eCommerce enterprises, healthcare organizations, payment leaders and financial institutions.

24-Mar-14

August Capital, Adams Street Partners, U.S. Venture Partners, USVP, Tenaya, CM Capital

ThreatMetrix provides context-based business security and fraud prevention solutions for businesses in various industries worldwide.

19-Mar-14

General Electric Pension Trust, Brookline Venture Partners, Fairhaven Capital

Digital Guardian provides data security solutions to protect data from insider and outsider threats.

12.0

15-Mar-14

Paladin Capital, Yaletown Venture Partners, Rho Canada Ventures, Zinc Ventures

Shadow Networks’ solutions detect and mitigate the large number of APTs on enterprise and government networks.

13.7

14-Mar-14

Index Ventures, Emergence Capital, Greylock Partners, AME Ventures, Blockchain Capital

Xapo develops and delivers online and offline security solutions for Bitcoin, a digital currency.

5-Mar-14

Allied Minds

Optio Labs develops transformational mobile security technologies for the federal and corporate enterprise.

5-Mar-14

KPCB, Allegis Capital, Norwest, Venrock, Google Ventures, Sierra Ventures

Shape Security develops web defense products to protect e-commerce and social network websites.

27-Feb-14

ONSET Ventures, DCM Ventures, Lenovo Group

Nok Nok Labs develops products and services for online security and authentication.

20-Feb-14

Blackstone Group, Khosla Ventures, Fairhaven Capital

Cylance provides enterprise, critical infrastructure and embedded cyber security solutions.

20-Feb-14

KPCB, Icon Ventures, TechOperators, Google Ventures, ff Venture, Webb Investment

Ionic Security offers a unified data and mobility security platform.

13-Feb-14

Atlas Venture, Highland Capital, KPCB, Sequoia Capital, .406 Ventures, Blackstone

Bit9 provides endpoint threat detection, response, and prevention solutions to detect and stop cyber threats.

Company



42

Amount Raised ($M)

13.0 25.0 20.0

40.0 10.0 40.0 16.5 20.0 25.6 38.2



12-Feb-14

Benchmark Capital, Meritech Capital Partners, Shasta Ventures, Tenaya Capital

CloudPassage provides server security products for public and hybrid cloud hosting environments.

7-Feb-14

Draper Nexus, Menlo Ventures

vArmour Networks provides software-defined security solutions for virtualized data centers and government cloud operators.

27-Jan-14

Easton Capital, OrbiMed Advisors, Shasta Ventures, TELUS Ventures, New Leaf Venture

TigerText provides security software for text messaging for physicians to use on their mobile devices.

23-Jan-14

Bessemer Venture Partners, Ascent Venture Partners, Cedar Fund, Salesforce

CloudLock provides cloud data security solutions.

21-Jan-14

Accel Partners, Innovation Endeavors, Glilot Capital Partners

Aorato develops a technology that provides protection to enterprise resources from advanced cyber attacks.

21-Jan-14

Index Ventures, Sequoia Capital, Zohar Zisapel

Adallom is a cloud access security broker which delivers visibility, governance and protection for cloud applications.

20-Jan-14

Tenaya Capital, Andreessen Horowitz, SV Angel, Andy Bechtolsheim

Bluebox Security operates as a stealth startup tackling enterprise mobile security company.

9-Jan-14

Wing Venture Capital, Norwest Venture Partners

Dtex Systems develops and provides secure user activity solutions.

7-Jan-14

BlueRun Ventures, Lightspeed China Partners, Matrix Partners

QingCloud is a cloud computing platform that provides IaaS-based flexible cloud services.

Company


Total Amount Raised ($M) Median Amount Raised ($M) Source: Capital IQ, PitchBook Data, CrunchBase.

43

Amount Raised ($M)

25.6 15.0 21.0 17.0 10.0 15.0 18.0 15.4 20.0

5,302.0 20.0

Security Public Trading Analysis

Security Sector vs Benchmark Performance Equity Performance Was A Tale Of Two Halves In 2015.

160 150

3 Months

6 Months

12 Months

High Growth

(21.5%)

(31.3%)

0.0%

Low Growth

(7.0%

(12.5%)

(16.1%)

NASDAQ

(8.7%)

(14.2%)

(3.8%)

S&P 500

(7.5%)

(11.6%)

(7.0%)

HACK*

(13.9%)

(27.2%)

(13.3%)

140 130 120 110 100

+0% -4% -7%

90 80 Jan-15

-13% -16% Feb-15

Mar-15

Apr-15

May-15

High Growth Security

Jun-15

Jul-15

Low Growth Security

Source: Capital IQ, market data as of January 19, 2016. * PureFunds ISE Cybersecurity ETF.

45

Aug-15 S&P 500

Sep-15 NASDAQ

Oct-15 HACK

Nov-15

Dec-15

Trading Multiples: High Growth & Low Growth Valuation Multiples For High Growth & Low Growth Security Companies. High Growth Security*

Low Growth Security*

(Current: EV / LTM Revenue Multiples)

(Current: EV / Revenue Multiples)

12.2x

8.4x

8.9x

9.0x 7.8x

6.8x Median: 5.9x 3.4x

3.9x

4.7x

5.0x

1.9x

Imprivata

Median: 2.2x 1.3x 1.3x FireEye

Fortinet

Rapid7

Qualys

Imperva

CyberArk Proofpoint

Splunk

Palo Alto Networks

Barracuda MobileIron

Source: Capital IQ, market data as of January 19, 2016. * High Growth represented by companies with >20% revenue CAGR; Low Growth represented by companies with 20% CAGR) 149.24 Palo Alto Networks 48.45 Splunk 26.46 Fortinet 15.23 FireEye 56.30 Proofpoint 54.07 Imperva 46.34 CyberArk 28.00 Qualys 14.26 Rapid7* 10.74 Imprivata

LTM Price Performance

19.4% (12.4%) (14.4%) (53.7%) 15.7% 20.3% 26.4% (25.5%) (10.9%) (28.2%)

Market Cap ($M)

12,821 6,284 4,558 2,445 2,274 1,699 1,467 957 593 269

Enterprise Value 2014-15E 2015E-16E ($M) Revenue Growth Revenue Growth

12,552 5,336 3,650 1,973 2,198 1,446 1,217 783 469 217 Mean Median

Low Growth Security (