Vulnerability Management, Application security

Interest in finance security continues as vendor receives cash infusion

Sheets of one dollar bills run through the printing press.
Sheets of one dollar bills run through the printing press at the Bureau of Engraving and Printing on March 24, 2015, in Washington. (Photo by Mark Wilson/Getty Images)

Drawbridge, a cybersecurity software and services provider to private investment firms, last week announced it had received a “strategic growth investment” from Francisco Partners for an unnamed amount, as financially focused cybersecurity upstarts continue to gain ground.

The four-year-old cybersecurity firm has worked with more than 750 clients, mostly involved in private equity, hedge funds, venture capital, family financial offices and asset managers, including Calmwater Capital, Levine Leichtman Capital Partners, OpenGate Capital, Soleus Capital and Vance Street Capital, according to the Drawbridge website. Drawbridge had at least one other major investment last year from private investment firm Long Ridge Equity Partners, according to Crunchbase. The Palm Beach Gardens, Florida-based service provider had already counted Long Ridge Equity Partners and Drawbridge’s own management team as stakeholders in the company.

“Drawbridge was founded to provide financial services firms with the state-of-the-art software and solutions they need to simplify and manage the complex and evolving cyber risk landscape,” said Jason Elmer, Drawbridge founder and CEO, in the company’s release announcing the investment. “The industry is facing increased cyber threats and escalating due diligence demands, and this new investment will enable Drawbridge to provide an even greater level of support to our customers.”

The partnership and financial boost from Franscisco Partners, which has raised more than $45 billion in capital over the past two decades and invested in more than 400 technology firms, is expected to “further enhanc[e] our leading offering across an expanding customer base,” Drawbridge President and COO Scott DePetris added in the release.

Unlike many well-known financial cybersecurity vendors, which focus on the broader market of mainstream banks, investment firms and even insurance companies that deal with the average U.S. customer, vendors like Drawbridge have honed in on a high-stakes market that may be smaller, but arguably will require at least as much security support as basic consumer and small business banking and investment companies going forward.

Like many sectors over the past two and a half years, the overall financial industry has seen an exponential increase in attempted or successful cyberattacks that include phishing, business email compromise, social engineering, denial of service, ransomware, and combinations of the above. While private investment firms may not draw as many potential bad actors or daily breach attempts as a super-regional bank with a household name and tens of millions of customers, sophisticated cyberattackers have increasingly realized that breaking into the inner digital sanctum of a high-end private investment firm could pay off in an even bigger way since they deal in larger accounts, wealthier customers and arguably more highly guarded information.

Hence, protecting these high-end financial firms and their digital interests will represent an attractive area of venture capital investment and outside funding. Market research giant Gartner pegged global cybersecurity spending at just over $86 billion in 2017. More recently, the same market is expected to be nearly five times that size five years from now, reaching a whopping $403 billion by 2027, according to BrandEssence, a market research firm. The financial services sector, including private investment, will likely represent a significant portion of that expenditure, according to industry experts.

Funding deals similar to Drawbridge’s have not happened in isolation. Case in point: A day after Drawbridge’s investment was announced last week, CIBC Innovation Banking said that it would handle $40 million in debt financing for Huntress, to enable the cybersecurity vendor to small-and-midsized businesses to grow, especially in managed security and employee awareness training.

“Like most criminals, cyber hackers want an easy life,” Drawbridge CEO Elmer said in an IBS Intelligence opinion piece in March. “Just as burglars prefer forgotten open windows over picking front door locks as a way in, so their digital counterparts are looking for targets that offer maximum return for minimum effort. ... Put simply: Don’t be an open window.”

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