Fast-moving Darktrace nets $18m and says profits not far off

The location of my meeting with Darktrace CEO Nicole Eagan is Pall Mall in central London and it is pregnant with history and character even if anarchists have occupied a nearby building. Thomas Gainsborough and Nell Gwynne lived steps away and the suite where we meet has views onto a man enjoying the sun on the terrace of the Oxford and Cambridge Club and, further back, Buckingham Palace. These are the offices not of Darktrace itself but Invoke Capital, the fund led by Mike Lynch, the founder and former CEO of Autonomy until the HP brouhaha, and an investor in Darktrace.

The connections between Autonomy and Draktrace are many. Eagan herself was once CMO of Autonomy and also at our meeting is Vanessa Colomar, once SVP of Communications at Autonomy and now managing press and investor relations at Invoke. There are yet more links: Darktrace is Cambridge-based and its tale of academic researchers applying the teaching of Thomas Bayes for enterprise IT is highly reminiscent of Autonomy.

But Darktrace is more than Autonomy getting the gang back together and its aims are very different. Today the company announced it had collected $18m in Series A funding, adding to the buzz around this company that has drawn attention for employing erstwhile staff from UK intelligence units MI5 and GCHQ as well as the US’s NSA. It got a few more headlines when Darktrace was among those who accompanied David Cameron on a recent Cyber Summit trip to Washington DC. The infant company is already valued at $80m.

Eagan, an American with a high-powered CV from Oracle, Quest and others, sees Darktrace as “a disruptive play in a very fast-moving, dynamic and large market”. Darktrace’s angle is to target the enemy within: rather than focusing on protecting network perimeters, its appliance sniffs for suspicious activity and sends alerts to chief security officers and other decision makers.

“We detect activity before it poses a risk to reputation or operations,” Eagan says. “We start from the position that [attackers] are already in because even when you have a sophisticated external attacker the first thing they do is take over credentials of internal individuals.”

Darktrace isn’t unique in addressing “the enemy within” but Eagan says its “very advanced math and machine learning” capabilities tracking what’s going on every attached device, server and network provide differentiation. The system monitors and learns the behaviour of these elements to develop what Darktrace calls an “enterprise immune system”. As well as the Cambridge university researchers who did the software engineering, the company is also bolstered by having individuals who have protected information critical to national security and are available to provide counsel.

“One of the values that the folks who have joined from GCHQ and MI5 give is that every worthwhile attack has had insiders on the network. They have the hands-on experience in signal and military intelligence.”

Darktrace also has the attention of Lynch, one of Europe’s most successful technology entrepreneurs and Colomar says he and the Invoke team work closely with the company and subsequent investments.

“Invoke was started by former members of the Autonomy team and we take a slightly different attitude to investment,” she says. “It has to be really clever, a fundamental technology with the possibility to grow really big, and we want to be very hands-on.”

Autonomy’s rise to command a $11.7bn price from HP has been overshadowed by the subsequent falling-out and allegations but as Eagan suggests, “there are worse things that could happen” than for Darktrace to turn into another Autonomy.

The company already has over $10m in booked subscription revenue, a little over a year after releasing its first product. Customers include power station firm Drax, Virgin Trains and now BT which is also reselling Darktrace as part of its Assure security portfolio.

“BT has already introduced Darktrace to several large customers and worked on its architecture to incorporate it into Assure,” Eagan says.

Despite its high-profile recruiting from the corridors of power, Eagan says its focus is on business buyers because “the enterprise moves far faster” than government and organisations can’t individually keep up with the rate of change. It is also very interested in the industrial control system market where the likes of GE could be prospects.

Darktrace has about 70 staff, half of which are in research and development. The cash influx will provide the opportunity to expand (an AsiaPac push is taking place) but Eagan is not pursuing the oft-trod path of accepting years of losses in order to achieve large scale. Indeed, she says Darktrace could be in the black by the end of this fiscal year.

“We kind of like to be profitable,” she says archly, contrasting Darktrace with some other security fast-risers such as FireEye.


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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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