This week, a relatively young cybersecurity company called Darktrace announced that it has raised an additional $65 million (£50 million) at a suspected valuation of over $400 million (£308 million).
That’s impressive in the current economic climate. No other UK tech startup has announced a funding round anywhere near that size since the UK voted for Brexit.
We caught up with Mike Lynch — the billionaire founder of enterprise software firm Autonomy and Darktrace’s first big name investor — to find out why he decided to put his money into the company.
“The reason I liked it was that it was a completely new approach,” said Lynch during a phone call with Business Insider on Wednesday. “Most of what’s out there in cybersecurity is based on knowing what you’re looking. So things like anti-virus and that sort of stuff or trying to build a big wall around the outside of your company, a boundary.
“The problem is that the world’s moved on and the attacks no longer have signatures. You can get kits that make attacks that don’t look like anything that’s been done before. But also every day you allow loads of people to walk through your wall and so the wall is pretty porous. The reality I was familiar with from some of my other roles as directors of large companies is that it’s very very hard to keep stuff out. The reality is almost every company is infiltrated. So you have to take a different approach. You have to do it much more like an immune system.”
Lynch, who is also a scientific advisor to Prime Minister David Cameron, said he was first attracted to Darktrace because of its “extraordinary mathematics” and “machine learning” — a subject he holds a PhD in from Cambridge University.
“Normally machine learning gets to work on things like computer vision and speech recognition and Siri and all that sort of stuff. The mathematicians behind it [Darktrace] were applying it to computer networks where it was learning all the things that go on automatically.”
Lynch believes that Darktrace, which now has over 1,000 customers, has the potential to become a $1 billion (£772 million) business if it carries on growing at its current rate.
“At the moment it’s growing at 600% [a year] and it has a thousand customers,” he said. “Obviously the reason why investors have come in at this $400 million (£308 million) round is they expect it to be a multiple of that in the not too distant future.”
Darktrace openly admits that it employs a number of staff that used to work for government intelligence agencies on both sides of the Atlantic, including MI5, MI6, GCHQ, the CIA, and the FBI. For example, Nick Trim, Darktrace’s managing director for Europe, the Middle East and Africa, has worked for at least one UK intelligence agency, as has John Richardson, the company’s director for operations and security. The names of the agencies can’t be revealed for national security reasons.
Lynch invested “a relatively small amount” in 2013 through his venture capital fund Invoke Capital. He made a follow on investment but he did not participate in Darktrace’s latest funding round.
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