CyberX, an industrial “Internet-of-things” security startup, has raised $18 million in a funding round led by the venture arm of chip-maker Qualcomm (NASDAQ: [[ticker:QCOM]]) and Inven Capital, a cleantech and new energy fund based in Prague, the Czech Republic.
Waltham, MA-based CyberX says it has seen rapid sales growth, which it attributes to boards of directors at companies acknowledging the business risks of an increasingly Internet-connected enterprise that can make operations—from factories and oil rigs to electrical grids and pharmaceutical labs—more productive, but can also open a business up to more cyber attacks.
The funds from Qualcomm Ventures and Inven will go toward expanding CyberX’s global sales footprint, investing in product development, and strengthening its technology, the company says.
In a press release, Viktor Miskovsky, investment director at Inven Capital, says, “We live in an era where everything is becoming digital and connected, and even critical infrastructure is being managed digitally. This brings a need for an industrial cybersecurity solution that is sophisticated yet simple to deploy and use.”
By 2022, more than half of all Internet-connected devices—about 14.6 billion—are expected to be “machine-to-machine” rather than human-controlled, according to a report from last November by networking technology company Cisco (NASDAQ: [[ticker:CSCO]]).
The complexity and increased possibilities of cyber threats stemming from an explosion of new Internet-connected devices—some heavy machinery and critical power infrastructure—has prompted lawmakers in Congress to seek standards for secure development and identity management on the devices, as well as requiring the U.S. government to only purchase equipment that meets those standards.
CyberX was founded in 2013 by a team of former military cyber experts. It started in Israel, then moved to San Francisco in 2014. By 2016, it closed the California office and moved to Framingham, MA, then later to Waltham. Its security technology was tailored for the control systems on machinery in factories and other industrial settings, as companies increasingly connect devices to the Internet for operation and monitoring.
The CyberX system monitors network traffic on the equipment and creates a model for normal data flow; when network behavior on the equipment deviates from that model, the system triggers alerts. CyberX’s technology also looks for abnormal data structures that—independent from the behavioral models it creates—deviate from standards set by industrial automation vendors. It also tries to spot insider threats by identifying unauthorized activities of users without sufficient privileges on the network.
CyberX was awarded a patent for the technology in January. It says its technology integrates with users’ existing security platforms from companies including Splunk (NASDAQ: [[ticker:SPLK]]), IBM Security (NYSE: [[ticker:IBM]]), Palo Alto Networks (NYSE: [[ticker:PANW]]), Cisco, RSA Security, ServiceNow, and more.
The $18 million investment comes a little over a year after another $18 million funding boost for CyberX, in February 2018, led by Norwest Venture Partners. Earlier CyberX investors Glilot Capital Partners, Flint Capital, and OurCrowd also contributed to the round announced today, which puts CyberX’s total venture capital raised at $48 million.
