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Security Startup Shadow Networks Has Raised Over $10 MIllion To Pull Threats Into The Matrix

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Shadow Networks, a stealthy new security company with high-powered backers, has raised over $10 million in a round of financing disclosed to the US Securities and Exchange Commission under its old name ZanttZ Inc.

Part of a new breed of security startup, Shadow Networks is based on technology developed for the U.S. Government that creates virtual environments where programmers can simulate cyber attacks.

After the round, the company’s backers now include Paladin Capital Group, a Washington, DC-based investment firm specializing in security and defense technology investments; Yaletown Venture Partners, a seed investment fund focused on the Pacific Northwest and Canada; and two undisclosed venture firms, according to a person familiar with the company’s financing.

As a result of its most recent round, and through its deep connections in the security industry, Shadow Networks also nabbed John Stewart, the chief security officer at Cisco Systems, for its board of directors.

Security threats are evolving and Shadow Networks was launched to tackle not the amateur hacker in a basement, but the advanced persistent threats that are increasingly the work of government-sponsored hacking groups.

“These APTs exist and they try to establish a beachhead in the company that gets targeted. Once they’re in there they’re trying to get to the crown jewels,” said one former Shadow Networks executive. “[Shadow Networks] is providing these highly scalable honey nets to create virtual infrastructure to obfuscate targets. It increases your attack surface and creates these shadow networks around your infrastructure.”

Meanwhile, Shadow Networks chief executive and company co-founder Eric Winsborrow, the former vice president of product marketing at McAfee, said that the technology was akin to putting security attacks inside virtual networks like the Matrix. “[And] like agents in the Matrix, these honeynets can show up anywhere in the network at any time,” he said.

The company’s technology is so impressive that even investors who aren’t backing it are willing to sing its praises — like Redpoint Ventures partner John Walecka, who named-dropped the company in an op-ed on the state of security technology in The Wall Street Journal.

“Software defined networks have changed the game,” said Winsborrow.