Local cybersecurity startups grow into IPO contenders
September 11, 2014
One Boston-area cybersecurity firm estimated Wednesday it would raise up to $80 million in an initial public offering of stock, and another raised $40 million to lay the groundwork for its own planned IPO.
The companies, CyberArk Software Inc. and Veracode Inc., are among those capitalizing on a torrent of expensive, high-profile data breaches that have vexed executives and consumers. They aim to join the ranks of established security software firms with a major Massachusetts presence including EMC-owned RSA, Kaspersky Lab, and Symantec.
CyberArk on Wednesday disclosed the probable financial terms for its IPO, signaling an intent to start trading its stock publicly within months. The firm aims to raise up to $80 million in the offering for expanding its business of stopping cyberattacks, selling approximately 5.36 million shares at $13 to $15 apiece. At those prices, the company would be valued at $380 million to $440 million. CyberArk is based in Israel but has its US headquarters in Newton.
Burlington-based Veracode on Thursday announced $40 million in new funding to fuel further growth, one of the largest rounds of venture capital funding secured by a Boston-area tech company in 2014. Chief executive Bob Brennan said the money should be the last raised by the firm prior to seeking an IPO, which could happen within the next year. Veracode expects its 2014 revenues to far outpace the more than $45 million it generated last year.
“The increasing frequency of breaches across Web apps and mobile apps does accrue beneficially to Veracode,” said Brennan, formerly the chief executive of Boston-based Iron Mountain Inc.
Headline-making data breaches in the past year have occurred at Target, Home Depot, and eBay, while the widespread Heartbleed flaw led to at least one case of stolen data. Hackers also accessed photos from the Apple iCloud accounts of several celebrities. A recent report, from the research group Center for Strategic and International Studies and antivirus firm McAfee, estimates the cost of global cybercrime at $445 billion last year.