Brightfly, Inc.» LogRhythm Takes Down $3million B Round

LogRhythm Takes Down $3million B Round

admin — Thu, 02 Apr 2009 14:34:30 +0000

Boulder, CO.based LogRhythm Inc. , a provider of solutions in the highly competitive log management/log analysis space, has added over $3.1 million to their warchest in their second round. As part of the deal, Joe Zell of Grotech Ventures joined the board alongside members from past investors Access Venture Partners and High Country Ventures “Colorado Fund”. Both investors participated in LogRhythm’s previous $3.25 million A round in Q4 of 2007.

This latest infusion shows that while many markets have cooled off, security investing remains active, a good sign for the profession and the state of the market.

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Lumigent Takes $6 million, Keeping GRC Hot

admin — Mon, 09 Feb 2009 17:08:26 +0000

On January 26th, Lumigent Technologies announced that it has secured a $6 million round from North Bridge Venture Partners to set a new course for the Acton, MA company [press release here]. Recently, we had the opportunity to sit down and chat with President and CEO, John Capobianco, and Paul Campaniello, the VP of Marketing, about this latest infusion and where they are headed with the company. One of the things that struck us immediately about the company was the introduction of Application GRC as a subset of the overall IT GRC market (Lumigent has actually trademarked the term). While technologically I can see the approach they are taking, especially considering where their product sits in the stack, it seems like spending $6 million to grow sales and marketing might not be enough cash to try to redefine the marketplace. Market issues aside, Capobianco summed up their play against the other IT GRC players very succinctly when he said, "We don't just monitor the controls, we are the controls." We think this is a smart strategy as more and more vendors are trying to fight each other to the top of the pyramid as the single highest aggregation point for compliance related data. This also plays well to the "feature not a product" strategy that we've seen work so well in the DLP space. When asked about this, Capobianco elaborated by saying, "The IT GRC space still has a long way to go. It’s fraught with tools and consultants instead of finished business apps." We certainly can't argue with that, as it's something we have been railing against for some time.

Based upon how quickly Lumigent can integrate with financial applications, we pondered out loud about who might be a good suitor for them down the road. Names like Oracle came up and were quickly dismissed by Capobianco; "Why won't Peoplesoft/Oracle do this? Because they don't have the subject matter expertise, it's a big distraction for them and it's non-core, and they aren't independent."

Of the new Lumigent executives that joined in conjunction with this round, John Capobianco, Tom Stiling, and Ron Nall have worked together previously at Bluestone Software, Computer Associates, Curl Corporation and MEDecision. Paul Campaniello and Fred Edling are both brand new additions to the team.

All of these are very valid points and are similar to those echoed in other plays of this kind. Considering the opportunity for a platform play, Lumigent feels that they would be a better fit for the likes of HP, BMC, or IBM. While still a bit early for this kind of speculation, we plan to keep an eye on these guys and hope to meet up with them when we are in Boston for the SOURCE Conference next month.

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A River Runs Through Mazu

admin — Wed, 21 Jan 2009 22:03:48 +0000

Riverbed Technology (NASDAQ: RVBD) annouced their acqusition of privately held Mazu Networks today. It seems like yesterday that Mazu was struggling with market acceptance around their behavior-based technology trying to use it to fight off "zero day" threats before repositioning themselves to jump into the SIM fray. Well, at least they faired a little better than HighTower. According to the official release, Massachusetts bassed Mazu will become another business unit of Riverbed. The best part about seeing deals involving public companies is the amount of disclosure. In this case, Riverbed will pay $25 million in cash at closing, with an additional $22 million possible if the new business unit hits $35 million in bookings for the 12 month period after closing. A tall order, but this is still a bargain considering the $47 million plowed into Mazu so far from Greylock, Matrix Partners and Benchmark Capital in 2000, Symantec dropped $12 million on them back in 2004 (possibly hoping for another Brightmail), and on up through StarVest Partners and PilotHouse Ventures in 2006.

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eIQnetworks Takes Down $10million A Round

admin — Wed, 21 Jan 2009 16:23:31 +0000

Proving that there is plenty of life left in the GRC space, eIQnetworks secured their first round of institutional financing this week led by Venrock. Venrock brings a significant amount of security space experience to the table having funded Vontu, IMLogic, Pedestal, and Whole Security, all of which eventually found there way into Symantec's hungry belly. Authentica, picked up by EMC, and Haystack Labs, acquired by McAfee round out the security trifecta. With CipherMax, Imperva, Red Seal, and CoreTrace still out in open water. Venrock partner, Mike Tyrrell, joins eIQ's board as part of the transaction.

Rest assured, with a track record of liquidity events around security products, and Tyrrell's past expereince on deals ending at SYMC (IM Logic and Pedestal), Venrock is one to watch. In the meantime, we're keeping tabs on eIQ.

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Palo Alto Networks Hits the ATM Again

admin — Mon, 10 Nov 2008 21:59:18 +0000

Coming back to the table for seconds, Sunnyvale, CA-based Palo Alto Networks heaped on another $10 million to their latest round (total of about $37 million) last week bringing their total VC take to around $64 million. This latest addition comes on top of the $27 million they raised back in August [coverage here] that we thought was a large number considering the way markets were headed, especially for such a late comer to the firewall party. It seems others thought differently.

This addition to the 3rd round included those firms originally shut out, specifically JAFCO Ventures , Japan Asia Investment Co. and Northgate Capital. What is interesting to note is that two of the three firms represent foreign-based investments. This is a sentiment that is being echoed in the Valley and elsewhere as firms are searching for fresh cash. Most recently in the rumor mill was Facebook, who it is said is searching for funding in the Middle East.

Lane Bess, despite just a few months on the job (he was hired back in July, shortly before they closed their B round) is showing he is a decisive character. Citing the fact that some customers have delayed orders Bess has said that there have been no outright cancellations. that’s a good thing too, since despite a flurry of layoffs, Palo Alto Networks plans to expand their headcount by 20% over next year. So far, our inquiries into how this money will be deployed and where the staff increase will go have not been returned, but we did hear that the intention is not to focus efforts on product engineering, but instead to direct the new resources toward gaining ground in the market through good old fashioned sales and marketing.

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The Sun Still Shines on GRC

admin — Mon, 10 Nov 2008 21:25:37 +0000

This one came to us from our friends in the KC area. It seems that following on with Agiliance’s recent round [coverage here ] the GRC space is still drawing investments. In this case, Dallas, TX-based Texert raiased a $3 million A round from New Venture Partners. With New Venture Partners being the only investor, it is of no surprise that Daniel Deeney and Harry Berry, both partners at NVP, will be joining Texert’s board. What is a surprise is that neither Deeney nor Berry appear to have direct expertise in this market. We don’t discount their experience in managing start-ups, or their skills at providing guidance to young companies in general, but with both having a telecommunications background (Berry has 30 years inteh sector) it leads us to wonder what additional value is beign brought to the table other than $3 million in cash.

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Enterprise Risk Managment Still Draws Funding

admin — Wed, 29 Oct 2008 17:29:24 +0000

Dallas, TX based Texert has secured a three million dollar Series A investment from New Venture Partners LLC that will be used for product development, expanding sales and marketing efforts, and launching the company's go-to-market strategy. In conjunction with this investment, Daniel Deeney and Harry Berry,partners at New Venture Partners, will join Texert's Board of Directors.

Daniel Deeney, Partner at New Venture Partners stated, "The recent inancial market crisis sounded a deafening alarm that the aggregation of riskexposure and management of quality controls is vital to the modern enterprise. The next-generation of enterprise risk management is upon us and Texert iswell-positioned to leverage a differentiated product strategy to capitalize on his dynamic market environment."

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Wall Street Meltdown Poisons Security’s Greenest Pasture

admin — Mon, 29 Sep 2008 20:22:55 +0000

The days of making the financial sector your "bowling pin" market seem to be waning. With past estimates showing tThe Street as comprising anywhere from 5-15% of total US IT spending, fledgling security companies have long since used their large networks (and pockets) as a testing ground for their products. With the recent shocks to the major investment houses, and the flurry of shotgun weddings at the behest of the Fed and SEC, it looks like early stage security firms are going to have look elsewhere.

While many have also looked a little further south, towards the Potomac, a new administration on the horizon may dampen those opportunities as well. With these two long time powerhouse markets on the rope, it's anybody's guess where the next fertile field will be found. We expect to see many companies starting out much smaller and tempering their growth curves accordingly by targeting local accounts across a variety of sectors, but in their own backyards. This trend is of course exacerbated by high fuel prices making coast-to-coast flights for sales calls far more costly. Also, be on the lookout for more "virtual sales" calls using webinar technologies and a push to inside sales models in the near future.We have already already watched this model prove itself with the regional VARs, so we know it works. The big question is: will the small players figure it out before their pipelines dry out?

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Accuvant Follows Fishnet’s Footsteps

admin — Tue, 02 Sep 2008 17:46:03 +0000

In a move that continues to surprise us, VARs and boutique consulting shops in the infosec and GRC space are getting funded. Most recently, Accuvant picked up an undisclosed sum from Sverica International, LLC. This follows on our coverage regarding Midwest up-and-comer Fishnet [article here], and virtual unknown, Digital Forensics Professionals [article here], providing more datapoints in an interesting trend. Is the venture community really this eager to put their money to work that will spoonfeed the channels?

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Palo Alto Weaves a Tangled Web With Their $27 million C Round

admin — Thu, 21 Aug 2008 18:43:18 +0000

Firewall hardware newbie Palo Alto Networks, based (oddly enough) in Sunnyvale, CA announced on Tuesday that it has raised $27M in a Series C round of funding. While the round was led by Lehman Brothers Venture Partners, it also included prior investors Globespan Capital Partners, Greylock Partners and Sequoia Capital. The company secured a B round of $18 million in June 2007, and coupled with this latest brings the company's total raised to around $53M. This news comes quickly on the heels of Palo Alto Networks announcing they had hired Lane Bess as CEO last month. Bess, a TrendMicro alum, replaces Dave Stevens, who left the company.

In a rare Valley phenomenon, founders Nir Zuk, Yuming Mao and Rajiv Batra who started the business back 2005 remain with the company. Zuk, who worked previously at NetScreen Technologies before their acquisition by Juniper Networks in 2005, is their Chief Technology Officer. Batra, also of Juniper but through the Peribit purchase in 2005, is VP of Engineering, and Mao, Juniper via NetScreen, serves as Chief Architect.

The board appointments that fell out of this latest round read like a redneck family tree:

Asheem Chandna, most recently off a 6 ½ year stint at Check Point Software Technologies as VP of Business Development and Product Management represents Greylock Partners (and is also a board member at Imperva). Chandna also spent some quality time at SynOptics/Bay Networks and AT&T Bell Laboratories in marketing and product positions.
Jim Goetz represents Sequoia Capital, but also was at Bay Networks as their VP of Network Management, and before that he rolled through AT&T Bell Labs product and marketing departments.
Imperva CEO, Shlomo Kramer, co-founder of Check Point back in 1993, also has a seat at the big boys table.
Old Schooler, Bill Lanfri, from the early management team of SynOptics sits on alongside new CEO Bess (who also did some time in AT&T’s marketing department) and CTO Zuk (who also lists Check Point Principal Engineer on his resume).
Venky Ganesan of Globespan Capital Partners seems to be the odd man out with few if any direct ties to the alumni departments of the other board members.

Between the board seats and the founders, this goes to show you that it pays to properly research the smaller firms you do business with. The management food chain is one incestuous bunch and often can act as an early indicator as to who makes the dance card when it comes time for the big M&A dance.

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