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Continuing a hot streak for e-mail security vendors, IronPort Systems Inc. on Monday announced a $45 million funding round. The San Bruno, Calif., company is just the latest recipient of venture capital this year in a space thats growing up quickly.
“Were starting to see some maturation of the technology,” said Jonathan Penn, an analyst at Forrester Research Inc. of Cambridge, Mass. “These are very good products at catching spam, and now its more about greater messaging security—beyond content scanning and into compliance, policy enforcement or outbound security.”
As enterprises scramble to implement the most effective security solutions, VC (venture capital) firms have scrambled to pump cash into the market. IronPort competitor CipherTrust Inc. of Alpharetta, Ga., closed a $42 million round in March.
FrontBridge Technologies Inc., based in Marina del Rey, Calif., received another $10 million in August, while Denver-based MX Logic Inc. closed $11 million last month.
Consolidation is another path to cash for the vendors. Brightmail Inc., which analyst firm Forrester has called the “overall leader,” was prepping for its IPO when security firm Symantec purchased the company in June for $370 million. Forresters Penn said his clients regularly see just a half dozen solutions vying for sales, including IronPort, Brightmail and CipherTrust, among others.
“Everyone really evolved over the past year,” said Shelly Soffer, a spokesman for IronPort competitor BorderWare Technologies Inc., based in Ontario. “[The industry] has gone from anti-spam point solutions to 10 or 15 solid players offering appliances and services.”
Four-year-old IronPort has yet to break even, but nonetheless on Monday announced record third-quarter sales of $16.5 million.
Next Page: Looking toward an IPO.
IPO
IronPort CEO Scott Weiss said he expects the company to reach profitability by mid-2005, focusing on the high-end market. With average sales into the millions of dollars, IronPort says it has more than 1,000 enterprise customers, including six of the worlds 10 largest ISPs, as clients.
“Once you establish yourself with the very top companies, you hold a great deal of sway in the security marketplace,” Weiss said.
Forresters Penn said IronPort will likely use the funding to expand its reach into international markets, where it has a stronger hold than competitors, and also to grow its technology.
“There are plenty of opportunities out there that IronPort is not yet poised to address,” Penn said. “Theyll likely acquire technologies to gain some advantages and expand their offerings.”
While Penn said he expects many of the e-mail security vendors to be acquired by larger security players, IronPorts Weiss ultimately has his sights set on an initial public offering.
“Were not just scraping by,” Weiss said. “When we go public, well be somewhere between a Salesforce.com and Google.“
Lofty goals in a market that not long ago was estimated to have as many as 300 vendors, offering everything from software, services and—like IronPort—appliances. IronPort designs appliances that sit between the firewall and messaging applications, and use reputation management, Symantec and Brightmail security, and content filtering to combat spam, viruses, DOS (denial of service) attacks and even e-mail scams.
Like most companies in the space, IronPort has expanded well beyond simple spam security, and last month introduced “virus outbreak filters” (PDF file) into its products.
The filters draw on the companys own private e-mail monitoring network, Senderbase.org, which tracks e-mail from more than 28,000 organizations to detect abnormalities within networks. This allows IronPort to get a jump on possible viruses and to predict outbreaks, quarantining suspicious messages until security firms release virus definitions to handle the problem.
“Were like the CDC [Centers for Disease Control] for the network,” Weiss said. “We cover our corporate customers during a time when a signature isnt available.”
New Enterprise Associates, a venture firm in Menlo Park, Calif., invested $18 million in IronPort, leading the companys fourth round of funding. IronPort has received more than $90 million of capital since its founding in 2000.
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