The Battle Of Security Startups

Posted: Feb 25 2014, 2:27pm CST | by , Updated: Feb 25 2014, 2:31pm CST, in Technology News


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@ #RSAC and the battle of security startups
Photo Credit: Forbes

When Guy Filippelli, CEO of Red Owl Analytics finished his 3 minute pitch at RSA Innovation Sandbox, not many thought he would win the “Most Innovative Security Company” award. Amongst the ten companies that battled to for the title, you had serious heavyweights like Dan Kaminsky of WhiteOps. Dan is the only American and one of the 7 people in the world who holds the Internet’s root DNS keys. Think of it this way – when something really bad happens to the Internet, it needs to be restarted, that when they call Dan. And then there is Co3 Systems which lists security guru Bruce Schneier as its CTO. Schneier is the author of 12 books on security — including Liars and Outliers: Enabling the Trust That Society Needs to Thrive and Carry On. So what made Red Owl stand apart ?

It uses a variety of tools (Jargon watch = elastic computing, inferential statistics, and intuitive visualizations) to pattern match human behavior and help the good guys stay safe. Guy pointed out, “What we found most surprising was our tools helped exonerate the good guys very quickly. ” By tracking 10 data streams such as origination, time stamp, Red Owl watches for patterns of digital behavior within organizations. That got Red Owl some serious love from the judging panel.

In the post-Snowden era, security is steadily gaining attention from entrepreneurs and investors alike. According to Pitchbook research and VC data analysis, over $1.5 billion is invested in 200+ security startups each year.

Of the top 3 largest security investments of 2013, A10 Networks raised $80 million plans for an IPO while FireEye raised $50 million and IPO’d in Sep 2013. Lookout raised $50 million (with total of $132 million) from Andreessen-Horowitz and Khosla Ventures and is on the IPO path. And exit values are trending upwards of $500 million.

Notable companies at RSA included Bluebox Security which emerged from stealth. Backed by $27.5 million in funding from Andreessen Horowitz, the company takes a fundamentally different approach to wrapping data and apps on mobile devices. Stuart McClure, CEO of Cylance made a near-perfect pitch to describe how their tools make intelligent decisions without relying on signatures ( a predictive / actuarial approach versus signature based approach to determine good data from bad). Cylance has raised $30 million, is backed by Khosla Ventures and the Blackstone group. Kaminsky’s WhiteOps, with one single line of java code can isolate and eliminate bot-infected traffic from advertising campaigns. Its only a $40 billion problem. Co3 Systems seems to be the only SaaS player (not counting armies of consultants) that can show a 10X improvement in post- response time to cyber attacks incidents. Here is the entire list of startups that competed at RSA Sandbox. 2014 promises to be a good year for all security startups, not just Red Owl Analytics. Thanks NSA RSA.

(Authors note: I am grateful to Tessa Griffin and the entire Pitch Book Data Inc team for their timely research for this blog.)

Source: Forbes

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