Secure Code Warrior raises $70m — largest ever US investment deal for Aussie cybersecurity play
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Secure Code Warrior has closed the largest ever US investment deal for an Australia-based cyber security firm.
The company raised $70m from investors including Goldman Sachs, Cisco and ForgePoint Capital. Existing investors AirTree Ventures and Paladin Capital Group also chipped into the raise.
We are ecstatic to announce that we have raised USD $48M in our series B funding round! This is incredible, representing the largest US investment of its kind in an Australian cybersecurity company. Here's to scaling in 2020! 🚀#securecodewarrior #AppSec https://t.co/EjgMC64RGV pic.twitter.com/i8SxqP1qiB
— Secure Code Warrior (@SecCodeWarrior) December 10, 2019
Secure Code Warrior began in 2015 and has quickly expanded globally. The company’s clients in Australia include Telstra, Woolworths, Xero and Tyro Payments (ASX:TYR).
It has also won overseas clients including PayPal, JP Morgan and Motorola.
AirTree’s James Cameron said Secure Code Warrior was “one of the fastest growing software companies we’ve seen come out of Australia”.
With forecast cybersecurity product sales in 2019 of $183 billion, the market may seem saturated. But co-founder Peter Danhieux believes this company stands in a league of its own.
“We’re in a market between developers and security,” he told Stockhead.
“Today’s software engineers have never been made aware of some of the software problems that can happen, and that’s why data breaches are increasing.
“In years past there was maybe 1 per year and now its every single week. These can be all pointed back to one bad decision around writing the software.”
Danhieux said Secure Code Warrior’s aim was to up-skill software developers and give them tools to write code in a way that eliminates data breaches.
“For roughly every 50,000 lines of code – there is one severe security risk in there, which someone can use to break in and steal data,” he said.
“Look at [incidents such as] Equifax and Capital One. They have significant consequences and traced back to a few lines of code where they used insecure function. We want to prevent these.”
Danhieux told Stockhead the capital raise would help the company expand globally.
“We’ve grown on very little capital in the past few years and we’ve got traction all over the world – in the US but also in Europe and in Asia,” he said.
“We know we have the fit, now it’s time to accelerate as it’s an open playing field and it will allow us to go faster and become a leader with this investment.”
Danhieux added that, judging by new client wins, traditional non-cyber industries also needed cybersafety.
Privacy laws such as Europe’s General Data Protection Regulation (GDPR) served as an extra push in that direction.
“The whole compliance atmosphere is forcing organisations to uplift the way on how they deal with client/customer data which includes security,” he said.
“In the last two years we began to see clients from travel and hospitality, government agencies and health.”
“They feel the problem and were looking for a solution. We didn’t actively market to them … they came to us.”
Flude admitted Secure Code Warrior considered crowdfunding to raise the cash, but decided the buffer of major institutional partners was unbeatable.
“I thought about crowdfunding,” he said. “It’s a fairly new concept in start-ups.”
“But one of the big benefits a Goldman Sachs or Cisco bring is it will help us a lot with being a serious player in the market.”
“If you’re backed by investment banks and technology companies it has a good impact on customers and candidates you want to recruit.”
“It was not only money, there’s plenty floating around, it’s all the other benefits that come with your investment partner.”
“If you choose to be listed, having the backing of a Goldman will be an additional benefit.”