Amid a rough investment climate for technology companies and startups, investors are still bullish on Atlanta’s cybersecurity industry.
DefenseStorm, an Alpharetta-based company that provides cybersecurity capabilities to regional and community banks as well as credit unions, has raised $15 million for hiring and product development.
The round was led by venture fund JAM FINTOP Capital, which invested $5 million. Existing investors participated in the remaining $10 million, including Georgian Partners, Atlanta-based TTV Capital, Live Oak Ventures LLC and Curql Collective.
Investor partnership
The investment will give DefenseStorm access to the over 80 companies that are members of JAM FINTOP, a collective of financial services firms that invest in financial technology companies and startups that innovate the financial industry.
Total assets of JAM FINTOP’s members total over $1 trillion, according to its website. Members of the network include Ameris Bancorp, Saint Louis Bank, New York Community Bancorp Inc., and Central Pacific Financial Corp.
“For community and regional banks, their options for software are dominated by monolithic players that are slower to react,” DefenseStorm CEO Steve Soukup said. “Banks want to see more rapid evolutions, so they feel like they have more of a vested interest in [companies] like us.”
The raise comes as investors have largely pulled back from tech businesses due to company valuations being reset and uncertain economic conditions. Companies don't tend to seek outside capital if their valuations decrease from when they previously raised money. Atlanta's OneTrust laid off almost 1,000 employees as a result of these strains. Marketing tech startup Terminus and Sonar Software also laid off employees in the recent weeks.
“If you're not pristine, it's tough to raise money right now and a lot of the decisions we made around responsible growth have positioned us for this,” said Soukup. “It speaks to a bright future for the company, not only to attract investors but to have some of them circle back for a second or third time.”
DefenseStorm's growth
For three consecutive years, the company has been named one of Atlanta’s fastest-growing companies in Atlanta Business Chronicle’s Pacesetter Awards. In April of this year, it was ranked No. 88 for growing its revenue by 110.47% and its staff by 83.64% between 2019 and 2021.
In September of last year, the company hit a milestone by reaching 100 clients, up from 20 five years ago. It looks to close this present quarter with over 130 clients and reach 200 by the end of the first quarter of 2023, Soukup said.
The company will look to add up to 20 employees to its 110-person workforce by the end of the year. While the company’s staff is located remotely across the U.S., a “fair” amount of upcoming hires will be local to Alpharetta, Soukup said.
Plans for expansion
Funds from the investment will go toward enhancement of its platform’s features. The company, which has always focused on cybersecurity, recently added policy and compliance as well as cyber fraud as solutions. It declined to provide further details on upcoming product development.
Recent growth and innovation by the company comes at a crucial time for cybersecurity for financial services.
A Modern Bank Heists report by the cybersecurity firm Carbon Black Inc. showed that there was a 238% increase in cyberattacks against banks as Covid-19 spread. The surge was likely due to an increase in digital traffic coupled with uncertainty of working from home, said Soukup.
“There have been evolutions of the threat footprint,” said Soukup. “Bad actors prey on chaos and uncertainty … Their ability to work in volume and find vulnerabilities are what we’ve been battling since we started, but the intensity of it has picked up.”
