Dragos has closed a Series D round and notched a $1.7 billion valuation to drive secure intelligence sharing and expand its vertical and geographic presence.
The Hanover, Md.-based industrial cybersecurity startup said its $200 million round was co-led by Koch Disruptive Technologies and BlackRock and represents the higher-ever valuation achieved by an OT cybersecurity company. Dragos will use the proceeds to expand beyond electric customers, push deeper into Europe, and get half of the company’s business flowing through the channel within two years.
“When BlackRock invests in something, it’s a huge market signal about the size and the scope and the importance of the market,” Dragos Co-Founder and CEO Robert M. Lee told CRN. “We’re at a place and maturity where we can help partners increase success with their customers.”
Dragos was founded in 2016, employs 362 people, and has now raised $364.2 million in eight rounds of outside funding, according to LinkedIn and Crunchbase. The latest funding comes just 10 months ago Dragos raised $110 million in a Series C round co-led by Koch and National Grid.
Lee plans to use some of the Series D proceeds to expand its Neighborhood Keeper program, which in collaboration with the U.S. Department of Energy has increased information sharing among electric customers from zero to 70 percent in less than a year, he said. Information sharing is key to determining the prevalence or significance of an abnormality by allowing visibility outside a company’s own borders. https://847a7053b9ad7aae4eed3d80ebf377e1.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html
However, this type of intelligence sharing historically would have been very invasive since it would have required access to data and identity information from private sector organizations. With Neighborhood Keeper, though, Lee said every single Dragos platform customer can see what detections are happening at every other customer without needing to access their data or identity.
Dragos has over the past year pushed into Gulf Cooperation Council (GCC) nations as well as the United Kingdom, Australia and New Zealand, Lee said. The company is now evaluating a couple of potential expansion opportunities in Continental Europe as well as deepening its presence in North America by pushing into new verticals, according to Lee.
From an industry perspective, Lee said Dragos wants to move into more areas of civilian infrastructure experiencing digital transformation such as food and beverage, pharmaceuticals, specialized goods and electronics, and paper and pulp. The threat groups targeting pharmaceutical companies are different than those going after the electric industry, but Dragos still benefits its breadth of visibility into OT risk.
Dragos wants to increase its share of business flowing through the channel from 20 percent today to 50 percent within two years from now by leveraging relationships with global and national players like PwC, Atos, Deloitte, and Optiv as well as local and regional solution providers since infrastructure is often a local conversation.
Lee wants to invest a portion of Dragos’ Series D proceeds into upleveling the staff and skills available to channel leaders and teams so that solution providers can become more trained and enabled around the company’s technology. Industries with less experience than electric and manufacturing in securing industrial controls systems are turning to partners for guidance around protecting OT assets, Lee said.
“Customers like their partners to have a point of view,” Lee said. “Growth is the name of the game. We can’t hire salespeople fast enough.”
Blackwood would like to see Dragos use some of its Series D proceeds to go deeper in areas where it has already been successful, pushing downstream from global accounts into enterprise and mid-market accounts, according to Ryan Morris, president of the Annapolis, Md.-based Dragos partner. This would allow Dragos to bring in more revenue and boost the security of nation’s critical infrastructure.
“There’s people at Dragos who know a lot about this space that we respect, and they’ve built a really impressive technology to secure these environments,” Morris told CRN. “The company has their priorities in line, and they’re now going to attack this market with an additional $200 million.”