Google has invested in another two cyber security start-ups this week, as venture capitalists flock to back a new wave of companies pledging to fight the growing threat of cyber crime.
Ionic Security on Thursday announced it raised $25.5m in a fundraising round led by Google Ventures and specialist cyber security investors Jafco Ventures, as well as existing investors including Kleiner Perkins Caufield Byers.
Another company, ThreatStream, raised $4m in a series A funding round led by Google Ventures, for its new cyber security intelligence platform.
Both deals come after Google’s venture capital arm last month funded Shape Security, which promises to use constantly morphing computer code to thwart cyber criminals.
Karim Faris, general partner at Google Ventures, said: “With the rise of cloud services and an increase in mobile workers, current security models are much less effective than they used to be.”
He said Ionic Security’s approach – to tie security to data wherever it is – is a “significant opportunity” for businesses and that ThreatStream offers a “smarter way to analyse threats and take action against them”.
Ionic Security’s product encrypts each piece of data, putting a strong envelope around sensitive information such as intellectual property that follows it wherever it goes – be it to a third party data centre or to contractors.
Steve Abbott, chief executive of Ionic Security, said the biggest problem in cyber security was companies’ losing control of important information as it is sent around the web.
“Corporations are spending billions of dollars on research and development,” he said. “You’re going to want to put an envelope around that.”
Third parties have been implicated in breaches as hackers often use their sometimes weaker protections as an easier path to the data they want. Target, the US retailer which lost 70m customer details when its system was attacked at the end of last year, said it had traced the breach to a vendor.
Ionic’s product allows companies to see what happens to the data once it leaves its network – whether a supplier is sending it to somebody else, consciously or unconsciously, and limit its use, for example, to ensure that data never leaves California.
Mr Abbott, who co-founded PGP, a data encryption company later sold to Symantec, said his intention has always been “to get privacy back on the web”. He said companies are increasingly concerned about spying by governments and competitors, and the threat of organised hackers who can sell confidential information for high prices on the black market.
Since Edward Snowden leaked documents from the National Security Agency, many companies had seen the threat become more urgent, he said.
“Snowden took all this information out of the NSA systems and now has publicised it. If they don’t necessarily have the best controls, who can? And I think it is why people are out of denial and into action mode.”
Investors are also eager to invest in a new wave of cyber security companies.
Shares in FireEye rose almost 65 per cent in the year to date, after it bought Mandiant for a $1bn at the start of January. Palo Alto Networks, also part of this new generation, which positions itself in opposition to the old antivirus software makers, rose almost 30 per cent so far this year.
Jafco Ventures invested in both FireEye and Palo Alto Networks and is now backing Ionic Security. Tom Mawhinney, a partner at Jafco, said Ionic had a “notable” and “unique” solution that was already being used by Fortune 100 companies. He said the company would start with larger organisations but could soon seek out smaller customers and expand internationally.