Posted on Tuesday, Jul 12th 2016
According to Gartner, worldwide IT spending is estimated to grow to $2.77 trillion this year. Gartner projects the overall security market to grow 7.8% annually over the next three year period through 2019. Another report by MarketsandMarkets projects the global cyber security market to grow from $106.32 billion in 2015 to $170.21 billion by 2020, translating to an annual growth rate of 10%. Billion Dollar Unicorn player Cylance is making a mark in this high growth market.
Cylance was founded in 2012 by Ryan Permeh and Stuart McClure. Stuart is a serial entrepreneur and former CTO of Intel’s McAfee. Prior to setting up Cylance, Ryan was a chief scientist at McAfee. Their experiences at McAfee helped them set up Cylance. Unlike other cyber security companies, Cylance uses machine learning and AI to build services that replicate or enhance human thinking to solve more complex problems. Its platform helps to proactively prevent the execution of advanced persistent threats and malware. Today its technology has been deployed on more than 4 million endpoints. Cylance claims that its predictive technology helps prevent more than 99% of advanced threats and malware compared with traditional endpoint anti-virus solutions that only detect half of them.
Cylance’s key product is CylancePROTECT, a platform that leverages math and machine learning to predict malicious files. The service does not rely on existing techniques including signatures, whitelisting, heuristics, behavioral, or sandboxing. CylancePROTECT works by extracting the features of a file and applying mathematical values to those features. It then uses algorithms to analyze the features and determine whether the files are good or bad. Cylance also offers professional services to respond to data breaches.
Cylance’s detailed financials are not known, but the company is already earning profits. It claims that its billings have grown more than 1,000% since its product was first launched in 2012, and customer numbers have grown 785% during that period. The growth makes it one of the fastest-growing security startups.
It is venture funded so far. It has raised $177 million in funding from investors including Blackstone Tactical Opportunities, Capital One Growth Ventures, Dell Ventures, DFJ Growth, Draper Nexus Ventures, Fairhaven Capital Partners, Insight Venture Partners, Khosla Ventures, (Kohlberg Kravis Roberts & Co. (KKR), Ten Eleven Ventures, and The Blackstone Group. Its last round of funding was held in June this year when it raised $100 million from Blackstone Group and Insight Venture Partners. While the company did not disclose its valuation, analysts pegged it at over a billion dollars. Cylance plans to use the latest funds to invest in sales and marketing and for geographical expansion.
Cylance will also need the funds to fight competition. Earlier this summer, IBM introduced a cyber security version of Watson. Initiated as a project, the service is being powered by IBM’s Bluemix cloud computing platform, and includes a partnership with eight other universities. As part of the project, IBM researchers have already begun feeding Watson with computer security data and are hoping to use Watson’s capabilities to help with information on security vulnerabilities, spam messages, and malware protection. Dell Secureworks is another big competitor that is a leading global provider of intelligence-driven information security solutions focused on defending cyber attacks.
Additionally, Cylance also faces competition from other smaller, emerging players in the market. For instance, there is Tanium that works on a peer-to-peer system and has partnered with Palo Alto Networks to ensure that the network and end points are secured. Then there is ZScaler that offers Security-as-a-Service platform to deploy security into the Internet backbone.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
Photo credit: Perspecsys Photos /Flickr.com
This segment is a part in the series : Billion Dollar Unicorns
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