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This past week, a half-dozen security vendors announced new funding rounds, totaling approximately $98 million. The different technologies and vendors that benefited from the investments are a microcosm of the current state of security and where investors see opportunities in the future.
By dollar amount, the largest round of funding was the $41 million Series D raised May 24 by data center security vendor vArmour, bringing the company’s total funding to date up to $83 million The promise of vArmour is that of network segmentation, helping an organization isolate different parts of a network in an effort to limit data breach risks.
The whole trend of segmentation is a hot one in IT today, so it’s no surprise that vArmour is able to raise funds in support of its business expansion. From a competitive perspective, VMware has been talking about the benefits of segmentation for at least a year and it’s a core part of the promise of Docker containers and the emerging trend of microservices. It’s also an area where startup Illumio has been active, though Illumio has raised more money than vArmour at $142 million.
Password security vendor Dashlane this week announced a $22.5 million Series C round as it ramps up its business. The idea behind Dashlane is to provide its users with the best password manager and a secure digital wallet. Time and again, passwords are identified in breaches and studies as being a weak link for security. Although many vendors with different approaches are trying to help improve password use, it’s still a very wide-open market with lots of opportunity.
Another area with lots of options—and lots of opportunity—is that of email security and authenticity. That’s where Agari fits in; the company raised $22 million in Series D financing, bringing its total funding up to $44.7 million. Agari’s promise is a highly scalable approach for securing email in a way that can limit the risks of an increasingly common attack, known as a business email compromise (BEC). In a BEC attack, a hacker will impersonate an employee or the CEO of company and make a seemingly legitimate request for a funds transfer that is, in fact, fraudulent. Given that every organization on the planet uses email, the total addressable market for Agari’s technology is massive, which is likely why investors see it as an opportunity to profit.
Demisto announced a $6 million Series A round of funding this week to help it improve the state of security operations. The key innovation that Demisto brings to market is the use of chatbots to help streamline and automate security operations.
The idea of using chatbots for automation is relatively new, though there are some competitors. Security vendor Threat Stack makes use of the popular Slack collaboration platform to enable what they call “ChatOps” for security. With the vast volume of threat data that hits enterprises daily, no doubt startups like Demisto that help automate operations, will continue to be attractive investments for some time to come.
Also of note this past week, Votiro announced on May 25 a $4 million Series A round of funding to help the company expand its zero-day email document protection technology globally. While Agari is focused on the authenticity of a given sender, Votiro’s core promise is that it can analyze and detect any potential malware in documents that might be attached to an email. As documents remain a top source of malware infection, it makes sense that there is a need for technology to help mitigate the risk.
Privacy is also always a hot topic in security, and on May 24, BigID raised $2.1 million in an initial round of venture funding. BigID defines itself as an enterprise privacy management vendor that can help organizations deal with privacy mandates, such as the European Union’s General Data Protection Regulation (GDPR).
Overall, what does this investment climate reveal about the state of security? The vArmour investment is an indicator that segmentation is a hot area as organizations continue to try and figure out how to reduce attack surface. Email and risk of malware as well as fraud have been hot topics for a decade, and they still are in 2016, which is why Agari and Votiro are in business. Passwords are also not a new problem, but password security is certainly not a solved problem either, providing an opportunity for Dashlane and its investors to benefit. BigID is riding the privacy wave and the need for GDPR compliance, while Demisto is building on the nascent demand for organizations to be more efficient to enable better security outcomes.
At this point in 2016, venture capitalists are not investing frivolously in security vendors. Investors are looking at the key technologies that are needed in the market and that they can profit from—including email authenticity, password security, privacy, automation and segmentation.
Sean Michael Kerner is a senior editor at eWEEK and InternetNews.com. Follow him on Twitter @TechJournalist.