British cybersecurity start-up Darktrace has raised $50 million in a funding round that values the firm at $1.65 billion.
The investment, announced on Thursday, was led by European private equity firm Vitruvian Partners and includes backing from existing investors KKR and TenEleven Ventures.
Cambridge-headquartered Darktrace, founded in 2013, uses artificial intelligence (AI) and machine-learning technology to detect and counter cyber threats. The investment is a Series E round, which is the fifth major funding round of a venture.
Darktrace says its technology, called the Enterprise Immune System, acts similarly to a human immune system. It uses a computer algorithm to monitor patterns and adapt to understand what constitutes normal and suspicious cyber behavior.
It further uses what is known as autonomous response technology to respond to any threats automatically, either slowing or shutting down a device or connection that has been compromised. The firm recently released the second version of its autonomous response system, called Antigena, which is aimed at targeting malicious emails.
Darktrace deploys this technology in a number of environments, including cloud, so-called internet of things and industrial control systems. Its clientele ranges from Britain’s London Gatwick Airport to American insurance giant AIG. The firm disclosed Thursday that its technology is now being used across 7,000 networks around the world.
Darktrace first passed the $1 billion valuation mark in May, when it reached a market value of $1.25 billion, elevating it into the ranks of the world’s so-called unicorns. The firm’s most recent valuation of $1.65 billion marks a 32 percent increase in the last four months.
The funding comes at a time of rapid growth for both the cybersecurity and AI industries. IT research group Gartner forecasts that spending in the cybersecurity sector will grow to $114 billion this year, a rise of 12.4 percent from the previous year, and that the total business value of AI will hit $1.2 trillion this year, spiking 70 percent from 2017.
Investment to fund expansion
The new investment follows a secondary share sale the business held in May, when Vitruvian took a stake in Darktrace. Vitruvian counts food delivery service Just East and recently-listed online fashion retailer Farfetch among its investments. Darktrace’s stock sale earlier this year lifted the company’s market value at the time to $1.25 billion.
“They have got a really good record investing in high-innovation firms, especially in high-growth markets,” Darktrace Co-Chief Executive Poppy Gustafsson, who heads up the firm alongside Nicole Eagan, said of the investment firm in an interview with CNBC.
“So given our objective, which is we have to increase our global footprint and expand into those different regions, that’s something they were able to support us with.”
Gustafsson said Darktrace will primarily use the extra funding to drive its international expansion, further exploring markets like Asia and Latin America.
“What the funding does is it means that we can seize all of these opportunities as they present themselves,” she said. “So, for example, last year we opened eight new offices around the world including Los Angeles, and today we’ve got 33 global offices.
“But there’s still some phenomenal growth in both Asia and Latin America and fundraisings such as these really mean that we’re able to seize those opportunities as they present themselves.”
The company has raised a total of nearly $230 million since it was conceived five years ago.
Prioritizing growth over profit
On the financial front, Darktrace is not yet a profitable business. But Gustafsson said that’s because the start-up is still in a high-growth phase and is prioritizing that and hiring over profitability.
“We could switch off that growth and we would be profitable, but we’re in a fortunate position where our investors are backing us to continue to expand and really reach that demand,” she said.
Darktrace disclosed Thursday that it has seen a 60 percent increase in its overall staff headcount over the last 12 months, with more than 750 employees worldwide.
“Darktrace has built a unique combination of world-class AI capabilities, deep cyber domain expertise, and a highly effective business model,” Vitruvian Managing Director Sophie Bower-Straziota said in a statement Thursday. “This has rapidly created scale and a leading edge over all competitors.”
Asked whether the firm would be considering an initial public offering in the near-term, Darktrace’s boss said it had no immediate plans to list its shares on the stock market.
“We’re focusing now on continuing to grow as quickly as we possibly can,” she said, adding: “The money that we just raised in the Series E will be used to increase our expansion and that’s just what we’re really focused on.”
The funding news arrives as experts increasingly warn of the impact of cyberattacks on businesses. Ticketmaster and British Airways are among the firms to have recently been the target of cyber breaches. Ticketmaster saw 40,000 British customers affected by a hack earlier this year, while British Airways suffered an attack that compromised the credit card details of 380,000 customers.
Nicole Eagan, chief executive of DarkTrace, speaks at a conference in San Francisco, California, U.S.
Source: Cybersecurity start-up Darktrace raises $50 million and is now worth $1.65 billion