An Annapolis startup that provides an alternative to a common internet security technology has raised an $18 million funding round.
Xona has built software that provides a more secure substitute for the virtual private network, or VPN. Security concerns around VPNs have increased the appetite for new products, CEO Bill Moore said, creating a strong growth opportunity for Xona. The company plans to use the new investment to move beyond its core business of enabling businesses to remotely control parts of a factory or power plant toward solving more data-centric computer problems.
“I think there's a recognition now that we can't use VPNs anymore for our most critical infrastructure assets and systems,” Moore said in an interview with the Baltimore Business Journal.
Xona already has a robust customer base across 35 countries, including companies like General Electric, Egyptian Liquefied Natural Gas and Mitsubishi. The company is looking to double its staff from 14 to 30 people through the growth spurred on by the investment.
The $18 million round was led by investment firm Energy Impact Partners. The New York-based investor has shown an interest in Baltimore-area companies in the past as one of the main funders behind Hanover cybersecurity firm Dragos. This is not Xona's first time raising a substantial amount of venture capital. In 2022, the firm raised $7.2 million to build out its sales and marketing team and pursue international growth.
"We see significant opportunities for solutions like Xona, especially in light of the major wave of VPN replacement and digital transformation initiatives. This partnership aligns perfectly with our commitment to supporting innovative technologies that help accelerate digital transformation and support the energy transition,” Tansel Ismail, vice president at Energy Impact Partners, said in a statement.
VPNs are a standard piece of internet security that countless individuals and businesses use to protect their data. VPNs conceal information through encryption so a message cannot be read by an outside party. Xona’s software takes a more direct route because it limits how a hacker can access a company’s network, making for stricter security, Moore said. Most companies are primarily concerned with ransomware, a type of malware that holds a user's data or device hostage and which VPNs are still very vulnerable to. A ransomware attack on an American oil pipeline in 2021 caused fuel shortages across the East Coast, leading many companies to evaluate their security protocols.
Xona is also developing a new product, Xona Central Manager, to help people track hundreds of industrial sites simultaneously, Moore added. The company’s core product allows clients to operate oil rig or factory components from their home or a central office, allowing staff to make critical adjustments without going to isolated locations. Moore said some clients even use the technology to operate unmanned power plants.
