WhiteHat Security bags $31M to protect you from hackers

The company welcomes new investor JMI Equity

Back in 2011, McAfee released a report detailing a massive five-year cyber attack that was most likely perpetrated by China, although McAfee declined to name names. In the report, McAfee’s VP of threat research Dmitri Alperovitch made a pretty startling statement: “I am convinced that every company in every conceivable industry with significant size and valuable intellectual property and trade secrets has been compromised (or will be shortly), with the great majority of the victims rarely discovering the intrusion.” Yikes.

As more business is increasingly done online, we have a huge need for more complex Web security. Enter WhiteHat Security. The Web security company announced Tuesday that it has raised $31 million in a strategic growth round led by new investor JMI Equity, with participation from existing investor Investor Growth Capital (IGC).

“Typically the attacks that you hear about are the ones that make headlines – when large, well-known companies such as Sony, NASA, NYSE and others experience high profile breaches,” WhiteHat CEO Stephanie Fohn tells me. “But it's pretty safe to say that almost every organization, regardless of its size or vertical, has likely had an attack attempt made against its sites.”

The average cost of a security breach is $7.4 million, according to Open Security Foundation Data Loss DB.

As Fohn tells it, the biggest threats to enterprises today aren’t necessarily vulnerabilities in the applications themselves, but the complexity of the Web application landscape within a large organization. Websites are the most commonly targeted attack vectors, and most large companies have hundreds, if not thousands, of interconnected websites.

“It’s a constant cat and mouse game between organizations and hackers,” said Fohn.

That could explain why WhiteHat’s customer base has grown so dramatically over the last year. In 2012, WhiteHat quadrupled the number of websites it protects to over 11,000 sites from 3,000. The company also experienced more than 70% growth in new bookings, with a 95% customer retention rate. WhiteHat now serves more than 500 customers worldwide across financial services, healthcare, and e-commerce. Additionally, WhiteHat’s headcount grew 80% last year to 250 people.

2012 was also a big year for WhiteHat’s product launches. The company released two new solutions in WhiteHat Sentinel Source and Sentinel Mobile. Sentinel Source (the result of WhiteHat’s acquisition of Infrared Security) allows for continuous testing during application development at the source code layer. Sentinel Mobile, which launched late last year, assesses all mobile applications for vulnerabilities, regardless of the device or operating system.

With this round, the company has raised $53 million altogether, though Fohn says that WhiteHat actually launched in 2001 with a small amount of angel funding and didn’t raise anything more until 2005. The new capital will be used to increase WhiteHat’s footprint in the small-to-medium enterprise (SME) market, support further international expansion and customer acquisition, and ramp up sales of Sentinel Source and Sentinel Mobile. 

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