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Claroty, which offers a security platform for “cyber-physical” systems (CPS) including IoT and industrial IoT, today disclosed a $400 million series E funding round along with the acquisition of healthcare IoT security startup Medigate.
The funding will be used to finance and incorporate the acquisition of Medigate, a 130-person company that had raised $50 million in funding, Claroty CEO Yaniv Vardi said in an email to VentureBeat. The exact terms of the acquisition were not disclosed.
“By combining Claroty’s and Medigate’s deep domain expertise and specialized technologies, we will be the only company that can secure all CPS across industrial, healthcare, and enterprise environments,” Vardi said.
An emerging technology category, cyber-physical systems’ security recognizes that cyber threats and vulnerabilities now extend beyond IT infrastructure alone, and can impact the IT- and IoT-connected physical infrastructure, as well. Gartner has forecast that cyber-physical systems attacks will result in more than $50 billion in financial impact by 2023 — and by 2025, will have resulted in human casualties.
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With the increasing convergence of IT, operational technology (OT), and other physical systems, new security approaches and solutions are required, according to Gartner.
Cyber-physical systems’ security offers a set of capabilities to enable organizations to securely manage their increasingly interconnected environments — particularly in terms of bringing better visibility of assets and systems.
Founded in 2014, Claroty offers security for cyber-physical systems spanning industrial/OT, enterprise/IoT, and healthcare environments.
The New York-based company said in a news release that it offers a “unified” platform that integrates with the current infrastructure used by customers, in order to provide a “full range of controls for visibility, risk and vulnerability management, threat detection, and secure remote access.”
Claroty’s platform offers a continuous threat detection solution with benefits such as full visibility of assets across OT, IoT, and industrial IoT; automatic segmentation of industrial networks; risk and vulnerability management; and rapid detection of potential threats.
Meanwhile, the company also offers a solution for secure remote access to OT environments with benefits including simplified connectivity, reduced cost, and full visibility and control over all remote connections.
In addition, Claroty’s platform integrates with security tools including firewalls; network access control solutions; security information and event management (SIEM) tools; and security orchestration, automation, and response (SOAR) solutions.
Customer traction, funding
Claroty has “hundreds” of customers, which are deploying its platform at thousands of sites, Vardi said. Customers include Pfizer, who Claroty has helped with securing its COVID-19 vaccine supply chain, as well as Coca-Cola Europacific Partners, he said.
Revenue is expected to more than double in 2021 compared to last year, according to Vardi.
The series E round brings Claroty to a total of $635 million worth of funding raised to date. The company did not disclose its valuation in connection with the funding.
New investor SoftBank, via its SoftBank Vision Fund 2, co-led the round for Claroty. Bessemer Venture Partners and Schneider Electric also co-led the funding with SoftBank. Other investors in the round included ISTARI, Team8, and Standard Investments.
In its news release, Claroty said it is now the “most well-funded cybersecurity company in the industrial, healthcare, and enterprise IoT sectors.”
Another company in the space, Armis, last month raised $300 million at a post-money valuation of $3.4 billion, bringing it to a total of $600 million in funding.
Healthcare IoT acquisition
Medigate, a New York-based startup that enables the secure connection of clinical assets to a network, was founded in 2017. It had raised funding from backers including YL Ventures and U.S. Venture Partners.
The acquisition “enables us to extend the reach of The Claroty Platform to cover the broadest possible spectrum of customers’ most critical assets, not only across their industrial environments, but also healthcare and enterprise environments,” Vardi told VentureBeat.
The Medigate product offers “comprehensive” asset discovery and profiling, identification of vulnerabilities, risk assessment, and protections such as network policy enforcement, according to the company’s website.
“In the world of CPS, the security needs and challenges vary a lot depending on the vertical. Securing the machinery in a water utility is a lot different than securing an MRI machine or CT scanner, which is a lot different than securing a surveillance camera, for example. So our approach to the market and serving customers is highly specialized by vertical,” Vardi said.
However, “the more that these systems converge, the more organizations need a security solution that can cover everything,” he said. “This is one of the reasons why Medigate is such a good fit for us.”
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