DC’s Cybersecurity Startup Scene Is Hot. Can It Get Hotter?

September 6, 2016

Cybersecurity startups around Washington have been on fire this summer. A handful of companies collectively have raised more than $100 million in the last six weeks or so, all approaching cybersecurity from different angles despite similar goals. The capital is just the most eye-catching aspect of the escalation. Startup incubators and accelerators specifically aimed to nurture cybersecurity startups have opened or expanded this summer, while some of their graduates have landed partnerships or otherwise staked a claim to the sector.

Throwing Money at the Problem

“Cybersecurity will be a growth industry over at least the next decade, but it’s hard to know how to read into the funding news,” Rick Gordon, a managing partner at Herndon-based cybersecurity startup accelerator Mach37 told me. “Bessemer [Venture Partners, a Silicon Valley-based venture capital firm] has been around here investing quietly for a while, now other folks are starting to get it and starting to make investments here. I think the cyber funding is an indicator of greater things to come for the region.”

In August, Bessemer participated in the $21 million round for Distil Networks and led the $29 million round for Virtru, both local cybersecurity startups. Distil specializes in blocking malicious automated attacks on company servers, detecting and stopping bots. Virtru works on data encryption and digital privacy protection, keeping data sent online private for individuals and organizations.

Cybersecurity has always had a large part of the D.C. area’s tech startup scene. Arguments about whether there was a bubble have been constant. One potential sign was the way that cybersecurity giant FireEye saw its stock plummet in May. FireEye’s prominence in D.C. skyrocketed after it bought local firm Mandiant for $1 billion in 2013. The company followed that up this year by buying iSight Partners, a Texas-based cybersecurity company with a large analytics center in Virginia for $200 million and Alexandria-based Invotas for an undisclosed amount. But FireEye’s stock hasn’t recovered from its May slump and it is still trading below its IPO price.

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