Cybersecurity M&As and VC Investments Roundup

The cybersecurity market is hot and growing fast, with projected growth from $71 billion in 2014 to more than $155 billion by 2019. Along with that, there’s a consistent stream of mergers, acquisitions and VC investments activity.

According to New York City-based CB Insights, in the last 5 years, $7.3 billion has been invested into 1,208 private cybersecurity startups. Since 2010, deals and dollars increased steadily growing by more than 100 percent in both areas during this time period. Funding in 2014 broke the $2 billion barrier for the first time, while deals continued their steady ascent growing to 269 deals.

Notable recent transactions covered by Cybersecurity Ventures’ Q2 2105 Cybersecurity Market Report:

M&A Deals

Singtel acquired managed security services provider Trustwave (Chicago, IL) for $810 million. Singtel, the largest telecommunications provider in Southeast Asia with over 500 million mobile customers, is expected to close on the deal within 3 to 6 months.

Lookingglass (Arlington, Va.), a cyber threat intelligence monitoring and management provider, announced an all-cash acquisition of CloudShield, a deep packet processing (DPP) company for an undisclosed amount.

Cloud security provider CloudLink (Ottawa, Canada) announced they have been acquired by EMC.

CSC acquired Autonomic Resources (Cary, NC), a cloud computing infrastructure provider. Autonomic was the first cloud service provider to achieve compliance under FedRAMP, and the first to achieve compliance with security controls outlined by the Defense Information Security Agency (DISA).

Defense contractor Raytheon (Waltham, Mass.) is investing $1.57 billion to create a new cybersecurity company with private-equity firm, Vista Equity Partners LLC. The new firm will combine Raytheon’s cyber products unit with Websense Inc. (San Diego, Calif.), which Raytheon agreed to acquire from Vista.

Bain Capital acquired Blue Coat Systems (Sunnyvale, Calif.) from Thomas Bravo for $2.4 billion. Thomas Bravo acquired Blue Coat Systems for $1.26 billion in 2012. Blue Coat provides online security and WAN optimization solutions.

The Kenjya Group (Columbia, Md.) and Trusant Technologies (Columbia, Md.) announced plans to merge. The combined company, The Kenjya-Trusant Group, will provide cyber protection, information technology, engineering, construction management and acquisition-support services to the Intelligence Community, Defense Department and Department of Homeland Security.

GTT Communications (McLean, Va.), a provider of cloud networking services, announced plans to acquire the managed services business of MegaPath for $152.3 million. The division provides private networking, access services and managed security services to more than 500 large clients.

Akamai Technologies acquired Xerocole (Boulder, Colo.), a DNS platform provider.

Vistronix acquired Agency Consulting Group (Columbia, Md.), Objective Solutions (OSI) (Columbia, Md.) and ExaTech Solutions (Herndon, Va.). Objective provides big data, cyber, collection and advanced analytics solutions to the Intelligence Community. OSI deal expands Vistronix’s subject matter expertise in data analytics, wireless security, communications protocol analysis and real-time secure messaging.

PAE acquired the Global Security and Solutions (GS&S) business unit of USIS. With approximately 1,900 employees, GS&S provides services in litigation support, biometric capture and enrollment, training, construction surveillance and security consulting. Acquisition enhances PAE’s existing support to the Department of Homeland Security and other customers in the classified market, along with multiple long-term contracts focused on identity management, infrastructure protection, information management and mission support.

Ross Technologies (RTGX) acquired The Tipstone Group (Fairfax, Va.), a provider of cyber research and program and portfolio management capabilities for the Defense Department and Intelligence Community.

Cisco acquired Neohapsis (Chicago, Ill.), a provider of application security, cloud security, compliance, IT risk and security strategy, mobile device security and network and endpoint security services. Deal enhances Cisco’s Advanced Malware Protection portfolio of security solutions, and helps it improve its network security services, both on-premise and in the cloud.

Microsoft acquired Aorato Ltd. (Israel), a cybersecurity startup that developed a directory services application firewall. Aorato raised $10 million in venture capital from Accel Partners, Innovation Endeavors, Glilot Capital Partners and Mickey Boodaei.

ZeroFOX (Baltimore, Md.), acquired Vulnr, a stealth-mode security technology company. Vulnr’s technology will be integrated into ZeroFOX Enterprise, cybersecurity’s social risk management platform, to bolster the company’s product offerings.

Investments and IPO activity

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

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.

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

Sqrrl (Cambridge, MA), a provider of big data analytics for identifying and responding to cyber threats, raises $7 million in Series B, led by Rally Ventures and 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.

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

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.

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

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.

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.

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

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

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

Hortonworks (Santa Clara, Calif.), an open-source platform for storing and analyzing big data, raised $100 million in their IPO with an initial market cap of $666 million.

Evident.io (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 had previously raised $1.5 million in seed funding from True Ventures.

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.

Endgame (Arlington, Va.), a developer of security intelligence and analytics tools, raised $30 million in 3rd round. 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.

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

Clef (Oakland, Calif.), which provides 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.

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

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.

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.

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

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

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.

Area 1 Security (Menlo Park, Calif.), a cybersecurity startup focused on social engineering attacks, raised $8 million in Series A, led by Kleiner Perkins Caufield & Byers. 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.

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

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

iSIGHT Partners (Dallas, Texas), a provider of cyber threat 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.

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.

Phantom Cyber, a cybersecurity startup with an ambitious idea to automate cybersecurity, announced a $2.7 million 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) and John C. Becker, former CEO of Sourcefire, and Zach Nelson, CEO of NetSuite Inc. (previously a senior executive with McAfee, now part of Intel).

CloudLock (Waltham, Mass.), a cloud based data security company, raised $6.7 million in 4th round of funding. Company previously raised $28 million from Bessemer Venture Partners, Cedar Fund and Ascent Venture Partners.

Cloud application security company Veracode (Burlington, Mass.) is planning to go public in May, according to Fortune. Veracode has raised over $110 million in venture capital funding. Its most recent round was a $40 million Series F infusion last September led by Wellington Management.

According to Reuters, leading SIEM vendor LogRhythm (Boulder, Colo.), whose investors include Access Venture Partners, Adam Street Partners, Grotech Ventures and Riverwood Capital, chose JPMorgan Chase and Morgan Stanley for an IPO in the second half of the year.

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.

Email security vendor Mimecast (Boston Mass.), whose investors include Insight Venture Partners, Dawn Capital and Index Ventures, has spoken to investment banks about an IPO later this year, but has not hired any firms, according to Reuters.

Steve Morgan is founder and CEO of Cybersecurity Ventures and editor-in-chief of Cybersecurity Market Report and the Cybersecurity 500 list of the world’s hottest, most innovative cybersecurity companies.

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