As Cyberattacks Surge, Security Start-Ups Reap the Rewards

On a Friday evening in October, Mr. Chandna, the Greylock venture capitalist, introduced Abnormal Security, the executive director of an email security firm he had invested in, to another investor, he said. That investor, Venky Ganesan of Menlo Ventures, who had been following a meeting with CEO Evan Reiser for months, immediately emailed Mr. Reiser to invite him to dinner that evening.

Mr. Reiser was driving, he said, from San Francisco to Mr. Ganesan’s house in Atherton, California, about 30 miles away. By the end of the weekend, Abnormal had signed a deal to raise $ 50 million on a valuation of $ 600 million, bringing the total funding to $ 74 million. The $ 40 million check from Menlo was the company’s largest investment of all time.

“When it comes to shotgun weddings, it’s as good as possible,” said Ganesan.

Since then, the ransomware attacks have given the wave of funding further impetus.

In January, Lacework, a cloud security start-up based in San Jose, California, received a $ 525 million grant. Investors have come forward about Lacework’s products that use artificial intelligence to detect threats, said Andy Byron, chief revenue officer and president of the company. In total, Lacework has raised $ 558 million since its inception in 2015.

Mike Speiser, a venture capitalist at Sutter Hill Ventures who led the January funding for Lacework, had no problem getting other investors involved, he said.

“I called the five people I thought were the best investors and asked if they would be interested. Everyone was interested and we had a deal within 48 hours, ”said Speiser. “A hundred percent of the people I called said they wanted in. We could have raised well over $ 1 billion. “

The business for lacework is booming because of “the combination of all these ransomware and nation-state attacks, along with the people who are so aggressively moving to the cloud,” said David Hatfield, who joined the startup in February as chief executive.

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