Cybersecurity Start-up CyberX Raises $18 million to Protect IoT Enterprises

CyberX, a Tel Aviv- and Boston-based industrial security company, has raised $18 million in new funding to expand its ability to protect Internet of Things devices as the risks for connected machines continue to rise.

The company, founded in 2013 by former Israeli military cybersecurity experts Omer Schneider and Nir Giller, offers an industrial cybersecurity platform to protect critical business infrastructure.

The industrial control systems (ICS) used by clients are continually monitored by CyberX’s platform, which identifies anomalous system behavior and can feed back insights within an hour. Its ICS-aware risk analytics and machine learning technology was awarded a patent by the U.S. governmentOpens a new window in January.

CyberX uses what it calls “finite-state machine modeling techniques” to analyze industrial control systems’ environments and machine-to-machine communications. The technology helps CyberX’s clients react immediately to unknown software vulnerabilities called advanced “zero-day” threats.

It also prevents costly production downtimeOpens a new window , catastrophic safety failures and environmental incidents, the company says.

A 2018 report on the state of industrial cybersecurity by Kapersky LabsOpens a new window , which surveyed 320 professionals, found that while three quarters of companies highlighted operational technology and ICS cybersecurity as a major priority, only 23% believed their infrastructure complied with minimal industry guidance or government regulations.

In a recent reportOpens a new window , Gartner predicted that OT security spending would grow at a compound annual rate of 45% through 2022, with the highest annual growth percentage occurring in 2019 and 2020.

The Norwegian industrial group Norsk Hydro was hit by the LockerGoga ransomware in recent weeks, which it estimates could have cost the company $40 million after operations across the aluminum smelting company’s entire business were affected.

Container shipping group Maersk was held hostage by the NotPetya ransomware in 2017, which it estimates cost it $300 million.

Companies are also facing struggles with their insurers over compensation for cyberattacks, with US snack group Mondelez suing Zurich American Insurance Company for claiming its 2017 attack by NotPetya was an act of warOpens a new window and refusing to pay out.

The $18 million investment, which will be used to extend CyberX’s global reach and develop its product lines, was raised in a venture round led by Qualcomm Ventures and Inven Capital, with participation from Norwest Venture Partners, Glilot Capital Partners, Flint Capital and OurCrowd.

The new funding follows a Series B round just over a year ago and brings the company’s total raised to date to $48 million.

“The backing we’ve received from new and existing investors is clear validation of both the massive market opportunity and CyberX’s proven ability to execute,” Schneider, the CyberX CEO, says. “We’re thrilled to have seasoned investors like Qualcomm Ventures and Inven Capital join our team as we continue growing the company at triple-digit rates.”

Boaz Peer, director at Qualcomm Israel and the investment director for Qualcomm Ventures, says CyberX has earned a major vote of approval. “We believe CyberX has the right management team, deep domain expertise and scalable technology to address the needs of the world’s largest and most complex enterprises,” Peer says. “We’re delighted to join as an investor given Qualcomm’s strong interest in Industrial IoT and our ability to provide connectivity, computing and security solutions for this market.”

The company, with its nation-state expertise defending critical infrastructure, represents major industries in energy, manufacturing, pharmaceuticals and others. While CyberX has not named its clients, it currently protects two of the top five U.S. energy utilities, as well as national electric and gas utilities across Europe and the Asia-Pacific region.

“Our societies and global economy rely on a dependable supply of energy, water, food, pharmaceuticals, chemicals, metals and transportation,” says Giller, CyberX’s chief technology officer. “We have a unique opportunity to leverage our differentiated technology and world-class expertise to secure the critical infrastructure supply chain upon which our modern world depends.”

Viktor Miskovsky, investment director of Inven Capital, applauded the company’s leadership and products. “We live in an era where everything is becoming digital and connected, and even critical infrastructure is being managed digitally,” he says. “This brings a need for an industrial cybersecurity solution that is sophisticated yet simple to deploy and use.”

CyberX claimed to Venture BeatOpens a new window that its ability to react quickly gives it an edge over competitors including Claroty, Indegy, NexDefense, Nozomi, Sentryo and Veracity. Its product can integrate with customers’ existing information security stacks, such as Splunk, IBM Security, Palo Alto Networks, Cisco, RSA NetWitness and ServiceNow.