Bit9 has raised $12.5 million in a new round of funding for its enterprise security business.

The Waltham, Mass.-based company offers protection for endpoints, or the smartphones, tablets, and computers that connect to an enterprise network. Since those endpoints are increasingly vulnerable to attack, Bit9 specializes in protecting them so that information technology managers can still allow employees to use them. Overall, the endpoint security market is expected to reach $10 billion by 2014 as corporations try to protect their assets from increasingly sophisticated cyber attacks.

Atlas Venture led the round, with participation from existing investors Highland Capital Partners, Kleiner Perkins Caufield & Byers, and .406 Ventures. New investor Paul Capital also joined the funding. To date, Bit9 has raised more than $23 million.

Demand for Bit9’s technology has escalated in the past year across industry segments such as government, healthcare, defense and retail. That happened in part because of sophisticated attacks, such as Operation Aurora, which cracked Google’s security system, and Stuxnet, which destroyed some of Iran’s nuclear centrifuges.

Patrick Morley, chief executive of Bit9, said that the company’s technology allows IT teams to precisely control what software is allowed to run and what is not. The company saw 140 percent revenue growth in 2010 and 60 percent growth in new customer acquisition. The company will use the money for new product development, better sales and marketing, and expansion in Europe.

Market researcher IDC expects the market to grow at a compound annual growth rate of 8.3 percent, reaching $10 billion in 2014, compared to $6.6 billion in 2009.

Bit9 was founded in 2002 and has more than 70 employees. Rivals include Symantec, McAfee and others.

[image credit: inbluetech]