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Security data and analytics solutions provider Rapid7 today announced its intent to acquire DivvyCloud, a startup developing a cloud infrastructure automation platform, for approximately $145 million in cash and stock. The companies expect the deal to close during Q2 2020, subject to approval and closing conditions.
The acquisition — which comes two years after Rapid7’s initial public offering — is a spot of bright news in a startup ecosystem that’s seen hundreds of companies lay off workers since March, owing to coronavirus headwinds. And it points to the cybersecurity market’s strength at a time when enterprises are experiencing a spike in malware campaigns using coronavirus misinformation. Barracuda Networks reports that it saw a 667% increase in phishing emails linked to the coronavirus during the month of March.
DivvyCloud, which is headquartered in Arlington, Virginia, has its origins in the infrastructure teams at Electronic Arts and its subsidiary BioWare Mythics. There, DivvyCloud CEO Brian Johnson and CTO Chris DeRamus managed over 5,000 servers across five different countries with millions of paying subscribers. The two left EA in 2012 to develop a product that could provide a consolidated view and framework for the types of hybrid cloud environments they themselves oversaw.
DivvyCloud’s software-as-a-service (SaaS) platform offers real-time remediation with configurable bots and over 200 out-of-the-box guardrail policies. It works across public clouds such as Amazon Web Services, Google Cloud, and Azure and protects against things like insecure interfaces and APIs, misconfigurations, weak authentication, account hijacking, and data breaches with a robust user and permission management system, all while integrating with popular DevOps platforms like Splunk, ServiceNow, Jira, Slack, and PagerDuty.
As for Boston-based Rapid7, the company offers a range of enterprise-focused cybersecurity services including vulnerability management, user behavior analytics, and phishing protection. It owns and maintains the Metasploit Project, a project that provides information about security vulnerabilities and tools for penetration testing, and it recently refreshed Insight — its platform that analyzes over 50 billion events and millions of assets daily — with new vulnerability management and app security testing products.
Insight — which Rapid7 says is built on nearly two decades of research, a constantly expanding vulnerability and exploit database, Metasploit, and learnings from thousands of penetration tests and an in-house threat-hunting team — combines with predictive analytics and operates on customer data from network scans, logs, and endpoints via agents and data connectors. In this way, it’s able to derive insights from the data, delivering guidance in the form of risk scores and alerts for incident detection, app security, and IT optimization.
Insight’s InsightIDR offering finds attackers in millions of events and gives IT team members the ability to search endpoints and data in real time. InsightUBA helps to detect, investigate, and stop threats with smart attack detection and incident response tools. Logentries centralizes logs and ingests data to provide answers to operations questions, while Nexpose accounts for vulnerabilities, controls, and configurations to spot sources of security risk. And AppSpider dynamically assesses custom web, mobile, and cloud apps for vulnerabilities across environments.
DivvyCloud raised $29 million to date prior to the acquisition from backers including Providence Strategic Growth, MissionOG, and RTP Ventures, with the most recent round — a $19 million series B — closing in April 2019. In May 2019, Johnson told VentureBeat that it had doubled its staff and client base from May 2018, bringing on customers like Discovery Communications, Sky, Mediacorp, Twilio, GE, Fannie Mae, Turner, Autodesk, Kroger, and Pizza Hut.
During its Q4 2019 earnings call, Rapid7 announced 16% year-over-year client growth and a 35% uptick in annualized recurring revenue (ARR) from 2018 to $338.7 million. At last count, it had more than 9,000 businesses using its product suite.
One thing’s for certain: There’s no shortage of competition in the cyberthreat detection and remediation space. Ironscales employs AI and machine learning to defeat organization-wide phishing attacks in real time, and France- and Boston-based Vade recently raised $79 million to further develop its filtering stack that protects against compromise, malware, and spam. There’s also Tessian, which uses machine learning for securing enterprise mail, and Valimail, which nabbed $45 million last year to thwart email phishing attacks. That’s not to mention ZeroFox — it novelly taps AI to surface threats of violence and identify deepfake videos, or videos that take a person in an existing image, audio recording, or video and replace them with someone else’s likeness using AI.
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