According to market reports, the global cyber security market is projected to grow annually at 11.3% to $120 billion by 2017. Growth is projected to be driven by the emerging markets of Latin America, the Middle East, Africa, and Eastern Europe. Cyber security startup FireEye is counting on these market opportunities for growth.
Milpitas, California–based FireEye was founded in 2004 by former Sun Microsystems engineer and entrepreneur Ashar Aziz to cater to the organizations’ needs to guard against a new breed of cyber attacks. As part of his readings, Aziz identified a gap between the evolution path of malware and the development of a clear blueprint for defenders. FireEye was created to help bridge this gap. FireEye took three years to develop their proprietary virtual machine introspection product, which helps customers protect their networks from advanced malware that would have otherwise bypassed traditional signature-based defenses. Their solutions supplement traditional and next-generation firewalls, IPS, antivirus, and gateways and block attacks across multiple platforms, including the web, emails, and viruses resident on file shares.
Most cyber security offerings rely on comparing emails and data files against known malware. This method leaves scope for a new virus to intrude into a network undetected. FireEye’s solutions silo an organization’s applications and keep them isolated from secure assets while studying their behavior. Their intelligent algorithm helps detect suspicious activity and thus prevent cyber invasion. Today, FireEye’s solutions have been deployed by more than 1,000 organizations, including the U.S. Department of Defense, Juniper Networks, and Equifax, to name a few. They claim that more than 25 of the Fortune 100 are on their client list.
FireEye earns revenues through the sales of hardware that is priced between $15,000 and $120,000. They also sell support and maintenance contracts for these tools. Their support contracts are priced between 18% and 20% of the hardware cost. FireEye has seen strong revenue growth in the recent past. While FireEye’s financials are largely undisclosed, reports show that they earned more than $100 million in revenues last year, recording growth in excess of 100% over the year. They were also ranked the fourth fastest growing company in North America per the Deloitte 2012 Technology Fast 500. Last November, FireEye also hired former McAfee executive Dave DeWalt as their chairman and CEO.
FireEye is largely venture funded and has raised $101 million in funding to date. Their investors include Norwest Venture Partners, Sequoia Capital, DAG Ventures, Juniper Networks, Jafco Ventures, SVB Financial Group, In-Q-Tel, and Goldman Sachs. Their latest funding round took place last month and raised $50 million. FireEye plans to use these funds to hire talent, expand internationally, and develop products. They plan to double their headcount of more than 400 employees within the current year.
Earlier market rumors had suggested that FireEye had filed their S-1 under the Jobs Act, which lets smaller companies file for an IPO without disclosing confidential financial information upfront. However, management has confirmed that they have not yet filed their papers and are instead preparing for an IPO that is anticipated by the end of the current year.