Darktrace, a cyber security company spun out of a piece of Cambridge University maths research, just got valued at over $US100 million (£64 million) in its latest funding round.
I’ve been writing about the company since it started out just under two years ago and I’m not surprised — in fact, I would have thought it would be worth more.
The company’s smart tech blows away top government cyber security agents. It’s working with huge corporates like Virgin Trains despite just starting out in September 2013. And it was funded by Mike Lynch, the man dubbed Britain’s answer to Bill Gates.
Darktrace’s big idea is that instead of doing cyber security like a medieval fortress by erecting a big wall to keep people out, it’s better to do it like espionage — track people who break in to find out what they’re after, who they are, and how they got in.
Darktrace’s system sets false “honeypots” that hackers fall into. Once they do, Darktrace can keep tabs on them. It can also pick up on strange activity in systems by monitoring what workers normally do to spot out of the ordinary behaviour.
All of this is fed back into a machine learning algorithm, which means Darktrace’s technology gets smarter the longer it’s running. The company likens it to an immune system that grows as it’s exposed to more illnesses.
Andy France, the former head of defence at Britain’s cyber security agency GCHQ, called Darktrace’s technology a “ground breaking, gear-shift moment” when I spoke to him about it at the start of last year.
Darktrace’s technology is based on mathematical research carried out at Cambridge University, and when France first saw it, he quit GCHQ after a 30 year career there, just so he could run the company — that’s how blown away he was. (France has since been replaced as CEO but still sits on the company’s board.)
France isn’t the only person to have such a strong reaction — the company is jam-packed with former government cyber security agents and spies.
Former MI5 director-general Lord Jonathan Evans sits on Darktrace’s board; Darktrace’s early managing director Stephen Huxter, was a senior figure within the British government’s cyber defence team; and 17-year NSA veteran Jim Penrose runs Darktrace’s US operations, launched in January.
These are just some of the most notable examples — Darktrace is stuffed with ex-NSA and GCHQ analysts working at the coalface.
Another sign of just how seriously people are taking Darktrace is how much money it has raised. This latest $US22.5 million (£14.4 million) raise comes just three months after Darktrace raised $US18 million (£11.5 million) to crack Asia.
It’s smart money too. Mike Lynch, the founder of Cambridge software company Autonomy, put $US20 million (£12.8 million) into the company back when it was just a clever maths equation. That’s a huge initial investment, and he’s continued to fund Darktrace since.
Lynch has become notorious in recent years for his very public spat with HP over the $US11.7 billion (£7.5 billion) sale of Autonomy back in 2011. HP was forced to writedown $US8.8 billion (£5.6 billion) on that deal.
But Lynch is still a smart cookie. He earned the nickname “Britain’s Bill Gates” for his role building Autonomy.
Finally, big companies are clearly impressed with Darktrace’s technology. While many of the companies that use Darktrace don’t want to shout about it, known customers include power company Drax, Virgin Trains and BT. Darktrace’s tech is particularly useful in complex networks — the more complexity, the greater chance of holes in the security system.
Cyber security is only getting bigger as an issue for companies and executives appreciate how useful Darktrace’s tools can be in solving a hugely complex challenge. David Cameron chose to take the startup with him to Washington for a summit on cyber security issues with President Obama earlier this year.
Remember, this company is only 23-months-old. Darktrace is already turning heads in the NSA and GCHQ, raising a tonne of money, and doing business with some of Britain’s biggest companies. That’s why it’s worth $US100 million — and why it could be worth much more.
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