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Back to blog May 03, 2019 No Comments Author: Andy Jones

Private Equity Investing in Cyber Security Companies

Last month, we commented on private equity firms investing in IT security companies. Expanding on that, this study explores the overall trend of PE firms investing in Cyber, Internet or Data security providers. This is a significant growth market, given every industry’s increased reliance on IT, software and data, coupled with the devastating effects of a security breach.

Private Equity Investment Trend – Cyber Security

The chart below shows the number of private equity investments in cyber security companies (excluding add-on investments) over the last 20 years.

To be clear, I have only included security as it relates to IT, software, data, etc. and not surveillance, home security systems nor related companies that provide physical security as a service.

Private Equity Investments in Cyber Security Companies

There’s an interesting spike in 2000, just before the dot-com bust. Then, very little investment volume until 2006 when private equity firms began to increase the pace of acquisitions in this space.

Unsurprisingly, there is a steep upward trend from 2006 through 2017. It might be a bit too early to call, but it appears that private equity investments in cybersecurity companies may have peaked in 2017.

NOTE – these are the transactions from the PE firms in our database. While many of these are VC-like investments made by PE firms (as they sometimes blur the distinction between VC and PE), we do not include in this chart all the VC investments made by pure VC firms.

Most Active PE Firms in the Cyber Security Space

  1. Insight Venture Partners
  2. JMI Equity
  3. Thoma Bravo
  4. Paladin Capital Group
  5. Summit Partners
  6. Updata Partners
  7. Edison Partners
  8. Grotech Ventures
  9. Columbia Capital
  10. IDG Capital

Sample Transactions from 2019

Below are sample cybersecurity portfolio companies acquired by PE firms in 2019.

Deepwatch (Saint Petersburg, FL)

April 2019 – Deepwatch raised $23 million in Series A funding. ABS Capital Partners led the round.

Deepwatch provides intelligence-driven managed security services to minimize, detect, and rapidly respond to perpetually evolving cyber attacks and threats against organizations.

NS8 (Las Vegas, NV)

March 2019 – Edison Partners led the $26 million investment in NS8.

NS8 is an e-commerce security and website performance company.

RackTop Systems (Fulton, MD)

March 2019 – RackTop Systems raised $15 million in Series A funding, led by Razor’s Edge Ventures and Grotech Ventures with participation from Maryland Venture Fund, Blu Venture Investors and Gula Tech Adventures.

RackTop Systems provides CyberConvergedTMdata security, a new market that fuses data storage with advanced security and compliance into a single platform.

Sev1Tech (Woodbridge, VA)

March 2019 – DFW Capital Partners acquired a controlling stake in Sev1Tech.

Sev1Tech is a provider of information technology, cybersecurity, cloud, and program management support services to the federal government.

Contrast Security (Los Altos, CA)

February 2019 – Contrast Security completed a $65 million Series D funding round led by new investor, Warburg Pincus. Existing investors, including Battery Ventures, General Catalyst, M12 (Microsoft’s Venture Fund), AXA Venture Partners and Acero Capital all participated in the oversubscribed round.

Contrast Security provides embedding vulnerability analysis and exploit prevention directly into modern software.

Kivu Consulting (San Francisco, CA)

February 2019 – Bow River Capital recapitalized Kivu Consulting, Inc.

Kivu Consulting, Inc. is a cyber security consulting firm providing incident response, risk management, cyber forensics investigation services and digital forensics investigations.

Nisos (Alexandria, VA)

January 2019 – Nisos raised $6.1 million funding from Columbia Capital.

Nisos provides cybersecurity and threat defense services, spanning both inside-the-network and outside-the-network engagements. The Company provides a suite of high-touch “active defense” services that assist enterprises in (i) protecting assets, (ii) informing corporate strategy, and (iii) defending against an evolving threat landscape.

Imperva (Redwood Shores, CA)

January 2019 – Thoma Bravo acquired Imperva, Inc. Imperva’s stockholders received $55.75 per share in cash. As a result of the completion of the acquisition, Imperva’s common stock was removed from listing on the Nasdaq Global Market.

Imperva, Inc. is a cybersecurity company that provides data and application security solutions that protect business-critical information in the cloud and on-premises.

Infradata (Leiden, Netherlands)

January 2019 – IK Investment Partners acquired Infradata from Waterland Private Equity.

Infradata provides cybersecurity and secure networking solutions, from design and delivery to aftermarket support and managed services.

CMIT Solutions (Austin, TX)

January 2019 – Craftsman Capital acquired CMIT Solutions.

CMIT Solutions provides enterprise-level outsourced IT solutions to small and medium-sized businesses. CMIT provides an array of outsourced managed services including data protection and back-up, cybersecurity, networking, hosting and cloud, applications, security and compliance, procurement, and virtual CIO/CTO.