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Billion Dollar Unicorns: CrowdStrike Joins the Club

Posted on Friday, Sep 29th 2017

According to a report by Markets and Markets, the global endpoint security industry is estimated to grow from $11.62 billion in 2015 to $17.38 billion by 2020. That translates to an 8% annualized growth rate for the next three years. Recent hacking reports, especially concerning the US Presidential election, have revived the interest in the cyber security market. Billion Dollar Unicorn player CrowdStrike is becoming a well-known name in the space.

CrowdStrike’s Offerings

Irvine, California-based CrowdStrike was founded in 2011 by Gregg Marston, George Kurtz, and Dmitri Alperovitch. The three set up the company with the mission of building the ability to manage cyberhacks that were not being addressed through existing malware-based defenses. They wanted to build a solution that would combine advanced endpoint protection with expert intelligence to pinpoint the adversaries perpetrating the attacks, not just the malware.

The idea to set up CrowdStrike came to George Kurtz when he was on a plane and saw his neighboring passenger wait for nearly fifteen minutes before McAfee was done scanning his laptop for viruses. He thought as the CTO of McAfee that was an eye-opening experience for him. He got together with Dmitri, vice president of threat research at McAfee, and decided to build a better, faster solution on the cloud.

Before setting up CrowdStrike, George and Dmitri conducted an extensive market study by visiting large organizations globally to understand their security challenges. They conducted detailed investigations into accounts of customers who had been hacked and realized that while organizations had spent millions on the best security products, they were still susceptible to and suffering from severe breaches. Most security solutions available then relied on stopping malware and were not focused on building technology that would be able to stop the attacks from happening. To address this, they focused their attention on saving the endpoint. They built a new security architecture that delivered entirely in the cloud and collected and analyzed endpoint data to prevent attacks.

CrowdStrike’s platform is known as Falcon, and it gives its customers the ability to detect and prevent never-before-seen attacks while they are still in progress. More recently, the company has been in the news because it was the first to publish evidence of the Russian government interfering in the US election by hacking into and subsequently releasing emails for the Democratic National Committee.

CrowdStrike’s Financials

CrowdStrike is privately funded and does not disclose its financials. It does reveal that it has endpoint deployments in 176 countries and processes 40 billion security events each day. Earlier reports had pegged the company’s revenues at $27.3 million in 2015 with a growth rate north of 2,400%. More recent estimates suggest that the company is running at more than $100 million annual run rate for the current year.

CrowdStrike has raised $256 million in funding so far from investors including Accel Partners, CapitalG, March Capital Partners, Rackspace, Telstra Ventures, and Warburg Pincus. Its last round of funding was held in earlier this May when it raised $100 million at a valuation of $1 billion.

CrowdStrike is not alone in the world of endpoint protection. Other new-age firms include names like Cylance and Carbon Black. Last year, Cylance had reported a valuation of over a billion dollars when it had raised $100 million for its funding round. Cylance too does not disclose its financials, but it has said that it is profitable. Some investors believe that CrowdStrike offers a superior product in the form “of an end-to-end platform, fully powered by the cloud, coupled with security services and threat intelligence for a complete approach to endpoint protection.”

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

This segment is a part in the series : Billion Dollar Unicorns


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