Palo Alto Networks acquired DevOps security startup Bridgecrew for $156M

Update: after this article was published, Palo Alto Networks confirmed the acquisition for $156 million. Our original story is below.

The pandemic and the world’s big shift to doing (even) more online has put an unprecedented amount of pressure on cybersecurity. Now, it looks like one of the big public players in that space, Palo Alto Networks, has made an acquisition that will help it address that challenge, specifically with security tools designed for those working in DevOps to handle vast volumes of security data more efficiently.

According to our sources and reports, the company is acquiring Bridgecrew, a startup out of Israel that automates the process of network monitoring and security remediation by translating the feedback into code. Its tools are used by fast-scaling, internet-based businesses like Robinhood, BetterHelp and OneMain Financial.

The acquisition was first rumored earlier this month in Israeli press as a deal worth more than $100 million. Two sources confirmed the talks to us at the time but said the deal had not yet been closed. Then, a report this morning in Israel’s Calcalist said the acquisition is now valued at around $200 million, possibly more if you count earn-outs.

Sources close to the startup’s investors confirm to us that the papers have indeed now been signed on the deal, so expect an official announcement soon, possibly in about a week.

Spokespeople for both companies previously declined to comment on any deal when we asked earlier this month. We are reaching out to both again.

A $200 million price tag would represent a strong return for Bridgecrew and its investors.

The startup, backed by the likes of Battery Ventures, Operator Partners and more than a dozen others, has only raised around $18 million, including a Series A of $14 million last year. According to PitchBook data, Bridgecrew had a valuation of about $40 million at the time of that last round.

Cybersecurity — specifically the need for better and more sophisticated solutions in the face of an increasing amount of breaches in an ever-growing threat landscape — has seen an increasing focus for years. Indeed, it’s one of the rising tides that has lifted Palo Alto Networks’ boat.

But in the last year, the COVID-19 pandemic has brought more attention to cybersecurity and the need for more automation in it than ever before.

The reason is fairly obvious but is worth repeating: As more organizations migrate operations into distributed, digital-only, cloud-based environments, architectures have become more fragmented, complex and simply bigger and more of an exploitation target.

That’s presented a challenge for those provisioning security for these operations, and that has led to a new wave of companies over the last several years building automated solutions, merging DevOps with security monitoring.

“We founded Bridgecrew because we saw that there was a huge bottleneck in security engineering, in DevSecOps, and how engineers were running cloud infrastructure security,” Bridgecrew CEO and co-founder Idan Tendler told TechCrunch last year. Others in this wider space include PortShift (which was acquired by Cisco last year), Tines and many others.

Palo Alto Networks has also been building its own tools for DevOps security, namely with Prisma, which it introduced in 2019 and updated last year.

It’s not clear why Palo Alto would choose to supplement that with an outside acquisition, but it’s notable that Bridgecrew focuses on DevOps security specifically and it has seen a lot of traction in that area.

Its sweet spot appears to be customers that are building huge businesses themselves on cloud infrastructure and are using automation as part of bigger efforts to ensure better cybersecurity practices.

It counts customers like Databricks for its flagship Bridgecrew platform product, which provides security scanning and remediation in the form of code across a wide range of infrastructure environments. The company recently said that its customer base and monthly signups both tripled in the second half of last year.

It has also seen a lot of pickup of Checkov, its open-source infrastructure-as-code (IaC) scanner that it says works across cloud infrastructure in Terraform, CloudFormation, Kubernetes, Arm templates or Serverless Framework to detect misconfigurations.

Checkov passed a milestone of 1 million downloads last quarter, speaking to the company’s reputation and traction with the very customers that Palo Alto is looking to reach.

Notably, Bridgecrew says it’s working on other open-source projects, so that could also be a focus for Palo Alto here.

Another takeaway from this news is how Israel continues to be fertile ground for hatching and growing cybersecurity businesses.

“Palo Alto Networks was established by Israeli founders, and Bridgecrew will be the seventh Israeli cybersecurity company acquired by Palo Alto in the recent years,” said Avihai Michaeli, a Tel Aviv-based senior investment banker and startup advisor.

We will update this story as we learn more.