Cylance, a cyber-security start-up trying to upend the old world of antivirus software, has raised $100m from investors including private equity firm Blackstone and Insight Venture Partners.
The fundraising values the company at $1bn, up more than threefold from $300m last year, according to a person close to the deal. Blackstone invested from its Tactical Opportunities fund, which focuses on complex markets where it believes risk is mispriced.
Stuart McClure, chief executive of Cylance, founded the company after he left Intel Security, the antivirus software maker formerly known as McAfee. He said the company had seen bookings increase by more than 1,000 per cent in the last year and is cash flow positive.
Cylance uses artificial intelligence to detect threats to computers and other devices, rather than simply comparing viruses with lists of already known malicious software.
Existing investors, including Silicon Valley venture capital firms Khosla Ventures and DFJ Growth, as well as private equity firm KKR, also participated in the round.
Cylance’s fundraising came after a period when venture capitalists appeared to be holding back from backing cyber-security companies. The pause came after VCs spent two to three years pouring cash into start-ups in the sector in the hope that they could solve customers’ cyber-security problems and earn them millions in the meantime.
“There’s a lot of noise in this space,” said Mr McClure. “Deal flow may be starting to come back for now but it is sort of a tentative and waiting game.”
Cylance is not alone in breaking the freeze: Lookout, another security start-up focused on protecting smartphones, received an investment from Microsoft for an undisclosed sum recently, while Zimperium, a mobile security company, raised $25m in a funding round led by Warburg Pincus on Monday.
Cary Davis, managing director at Warburg Pincus, said the company was willing to put money into Zimperium despite the “crowded market” because of the clear threat from hackers.
“Customers are in so much pain that they need to try to find solutions that work,” he said. “Products from large established players aren’t working.”
Last week, Vista Equity Partners, the private equity firm, announced it would buy Ping Identity, which tries to ensure that only the right people in an organisation can access sensitive data, while Ionic Security announced a $45m round, signing up Amazon and Goldman Sachs as investors.