Investors Flock to Cloud Security Providers
Investors, including major cloud players, continue to pour money into cloud security and automation startups as the need grows to protect sensitive data and defend cloud infrastructure.
Among the beneficiaries is Hytrust Inc., the cloud security specialist based in Mountain View, Calif., which announced its latest cash infusion this week totaling $33 million. The funding round includes $8 million in venture debt and loans, the company said Wednesday (April 1).
Along with existing investors, HyTrust said a syndicate of new venture capital and strategic investors also joined in the $25 million equity-funding round. They include Cisco Systems, datacenter network security specialist Fortinet Inc., Intel Corp. and VMware. The company also is backed by In-Q-Tel, the CIA's technology incubator.
HyTrust also said it has expanded a line of credit with City National Bank to fund up to $8 million in projects focusing on product development and international expansion.
The cloud security sector is experiencing robust growth and heavy investment as enterprises struggle to secure datacenters and increasingly virtualized infrastructure. HyTrust's approach emphasizes automation and policy-based security tools for private and hybrid cloud deployments. Along with data protection, the company stresses providing greater visibility into what is happening in private and hybrid cloud environments.
The latest funding round was lead by Accelerate-IT Ventures, which targets the U.S., European and other regional markets. Another new investor, the Canadian VC firm Vanedge Capital, focuses on enterprise software development for IT security. Both companies will join HyTrust's board of directors.
Existing investors in HyTrust include Epic Ventures, Granite Ventures and Trident Capital. Along with Intel and VMware, HyTrust's technology partners include Hewlett-Packard, IBM, Splunk and the encryption specialist RSA.
A growing list of industry surveys indicates that data security is becoming a key issue in the datacenter as the virtualization of cloud infrastructure grows. This growing complexity along with a steady stream of high-profile data breaches has been attracting more investment in cloud security startups like HyTrust.
Data breaches are estimated to cost U.S. companies an average of as much as $3.5 million annually, according to data security proponents. The data security firm CertainSafe estimates that the cost to businesses of individual data breaches ranges from about $200 for a "standard record or data" to as much as $359 for individual medical records.
CertainSafe announced a partnership last week with MicroTech, a large government contractor, to integrate its file-sharing encryption and tokenization architecture into Microtech's hybrid "MicroKloud" platform. The proprietary encryption technology deploys in parallel with a security data token protocol to encrypt individual files, the company claims, down to the byte level.
Data security outfits like CertainSafe and HyTrust are increasingly focusing on the federal market where sensitive health care and other private data is being stored in the cloud.
