If you need proof that security is a red hot market these days, how about this morning’s announcement that cybersecurity company CrowdStrike landed a $100 million Series C investment round?
The round was led by Google Capital with Rackspace, which happens to be one of the company’s customers also investing. Existing investors Accel and Warburg Pincus also participated. Today’s investment brings the total to-date to $156 million.
Business Insider broke the story as a rumor on Friday night. We have additional details.
CrowdStrike describes its Falcon cloud platform as “end point protection” delivered as Software as a Service. Traditionally this type of protection has been delivered by companies like FireEye and Cisco as a hardware solution that sits on your network and is designed to protect organizations from attacks.
That worked fine when there was a well defined end point, but in a mobile and cloud world, the lines between inside and outside have become blurred. Employees aren’t sitting at their desks on computers under the control of the company. They are increasingly moving through the world with mobile devices, and as such, the notion of security has changed — and security companies are adjusting.
In fact, most security products today are designed to protect customers from malware, exploits, malicious websites and unpatched vulnerabilities. CrowdStrike claims to differentiate itself from the pack by offering protection even when the attack isn’t delivered by malware, according to a CrowdStrike spokesperson.
As CTO Dmitri Alperovitch also pointed out in a blog post last week, because Falcon is delivered as a cloud service, the company controls the way it works. In other words, unlike security hardware, nobody can buy it and reverse engineer it. That should theoretically give the company a leg up over competitors.
One of the main reasons CrowdStrike caught the attention of its investors is some eye-popping growth numbers including 550 percent Compounded Annual Growth Rate (CAGR) in Annual Recurring Revenue (ARR) for the Falcon platform over the past three years. It also claims 225 percent, year-over-year growth in Annual Contract Value (ACV) subscriptions and a 700 percent year-over-year increase in the number of transactions valued at $1 million or more.
The company was launched by former executives from McAfee in 2011. Its most recent funding was a $30 million round in September, 2013. When a company gets a round of this size, it usually signals investors are confident that it can maintain its remarkable growth — and the money should help it expand sales, customer support, marketing and research and development as the company scales.
Security has captured the attention of investors of late as the number of high-profile breaches has increased over the last year from OPM to Anthem to Sony, and venture capital firms recognize the market potential for companies that can offer effective security solutions.