Days Before Closing Its $5M Series B, Mobile Security Startup Mobilisafe Acquired By Rapid7

Rapid7, a maker of vulnerability and penetration testing products, has acquired Seattle-based mobile security startup Mobilisafe. In November, Rapid7 raised an additional $50 million in Series C financing and announced its intentions to expand its current product lineup via acquisitions. Mobilisafe, whose solution identifies vulnerabilities present on employees’ mobile devices in realtime, was an obvious fit.

Co-founded by former T-Mobile software architects Giri Sreenivas and Dirk Sigurdson in 2010, the company first launched into beta early this year, then became publicly available in June. Unlike the current crop of mobile device management solutions on the market today, the startup’s unique capabilities went a step beyond tools that just manage, monitor, lock down or remote wipe devices, by offering businesses a way to detect security vulnerabilities on devices, determine if patches or firmware updates are available to address them, then message employees on how to download those updates to secure their smartphones or tablets.

According to Mobilisafe CEO Giri Sreenivas, the company wasn’t thinking about an acquisition when they went to talk with Rapid7 – they were thinking of doing a partnership. In fact, Mobilisafe was only days away from closing on a $5 million Series B round of funding, with both existing and new investors participating. (The company was backed by Madrona Venture GroupTrilogy Equity Partnership and T-Venture). Although the company had received numerous inbound acquisition requests from other security firms in the past, none were a good fit, and none were entertained, says Sreenivas.

The two companies, Rapid7 and Mobilisafe, had first talked at the beginning of the year, just as Mobilisafe was launching an early version of its product into private beta. “Rapid7 was on my radar because they had raised a mega $50 million round in November of last year. That’s a pretty large round of financing for a security company,” says Sreenivas. “I found that there are a lot of things [at Rapid7] that are very similar to the way we look at the security space,” he adds, noting what he thought of the company following the first meeting.

At the RSA conference later this year, the two CEOs, Sreenivas and Rapid7’s Mike Tuchen, met again. Sreenivas says he went into it thinking it would be a talk about partnering. But instead, it was an acquisition offer. “We took a step back and said, let’s talk a closer look at Rapid7 right now,” Sreenivas explains. “We had identified some things early on that were philosophically very well-aligned, but we wanted to understand their business a little better.” And that’s what it came down to. Sreenivas says he realized that Rapid7 had a great sales and marketing team, a great management team, and great products – and he weighed that against the risk of taking on more financing.

“It comes down to balancing the difference between impacting a market, and really accelerating the adoption of your product with a specific market, and really going out and building a big company,” says Sreenivas. “Sometimes they’re one and the same, and sometimes they’re not.”

While the companies aren’t revealing the terms of the deal, Sreenivas says investors are happy. At the time of the acquisition, Mobilisafe had 30 deployments completed, ranging from a small 15-person company up to a large 7,500-person enterprise. Dozens more deployments were in the works. Because of the nature of its business, not all customers are willing to be named. But some who provided testimonials for the company’s website included ApptioWildTangentWinShuttle and Cascadia Capital.

Now a part of Rapid7, Mobilisafe is available priced on a per-user basis at $24 per user per year (on an annual contract) or $3 per user per month (pay as you go). Further down the road, it will be integrated into Rapid7’s Nexpose security assessment product to give customers a full and complete view of their organizations’ risk – including mobile. The deal will also mean expanding Mobilisafe’s reachable customers base beyond working with on-premise solutions.