The value of Cylance, a cybersecurity startup firm that applies artificial intelligence (AI) and algorithms, has reached $1 billion after a Series D funding round that exceeded $100 million led by Insight Venture Partners and Blackstone Tactical Opportunities. The funds will be used to accelerate the company’s rapid business growth through the expansion of its engineering, marketing and sales programs, as well as their global reach.
The company’s high valuation, which is three times more than its 2015’s valuation of about $300 million, shows an increasing interest of investors in cybersecurity sector amid concerns that most of the traditional cybersecurity firms are not adequately addressing new cyber threats.
In addition, cybersecurity has lately become an essential factor in the banking sector following several breaches involving SWIFT, an interbank messaging network, and central banks.
Cylance was established by Mr. Stuart McClure, a former employee of McAfee, in 2012. According to the company, its platform uses a series of algorithm-based security procedures to scrutinize networks as a way of identifying weaknesses or threats and shut them down.
The use of AI, algorithms, big data analytics and machine learning is growing steadily in the cybersecurity sector. The successful application of these methodologies has opened doors that were once closed. New opportunities started popping up after several private equity companies spent a lot of money in the sector, without realizing the real returns as the number of cyber threats and attacks continued to increase.
Cylance’s latest investment funding round features private equity companies such as KKR and Blackstone. Several other cybersecurity companies have also completed successful fundraising rounds. One of these is Zimperium, a mobile security firm, which recently closed a $25 million Series C funding round that was led by Warburg Pincus.
Nevertheless, some investors are apprehensive of Cylance’s rapid valuation increase. This kind of scenario was witnessed once before with an Irish internet security startup firm, Baltimore Technologies. In late 1990s, the company’s performance was excellent. It recorded a revenue increase of 215%, hitting $29.7 million, during its peak performance in 2000. Four years later, the company fell drastically and started selling its shares at a throw-away price.