Boston investment firm Battery Ventures has acquired a Bethesda cybersecurity firm's software products division.
Battery Ventures announced Tuesday that it has acquired GrammaTech's software-as-a-service unit and established a new company, CodeSecure Inc., that will focus on providing cybersecurity software to clients in the private sector. Legacy GrammaTech, meanwhile, will continue providing consulting services to government agencies.
Mike Dager, who has been the CEO of GrammaTech since 2019, will take over as CEO of CodeSecure and Dan Goodwin, previously GrammaTech's head of research, has been named CEO of GrammaTech. Battery Ventures Vice President Lauren Wedell and Partner Jordan Welu will join CodeSource's board.
The sale of the software-as-a-service division to a private equity group is the culmination of Dager's years-long effort to spin it off into its own entity. As he sees it, the software unit will be able to grow more rapidly as a standalone company than as a division of a labor-intensive “Beltway Bandit," or government contractor.
“In the world of software, where you could just get sales guys to sell more and more software products, you can double your revenue and add no employees," Dager said.
Dager declined to disclose terms of the deal, GrammaTech's revenue or headcount. He said about half of GrammaTech's employees have joined CodeSecure and that he expects to double the size of the new company's staff over the next 18 months.
CodeSecure provides companies with software called CodeSonar and CodeSentry, which blocks clients' applications from being hacked by cybercriminals. About 90% of CodeSecure’s customers are in the commercial sector in industries ranging from health care to financial services to payments processing to aviation. GrammaTech, spun out of Cornell University in 1988, helps agencies like the Department of Defense and Homeland Security to sure up their cybersecurity defenses by testing and analyzing agency hardware and software vulnerabilities.
CodeSecure will take over GrammaTech's headquarters at 6903 Rockledge Drive in Bethesda. GrammaTech also has offices in Ithaca, New York.
Dager said he may eventually need to shop around for larger for if the company ramps up hiring as intended. For now though, its space is adequate because most employees are working a hybrid schedule.
"I would just say that if I had my way, I'd get everybody back in the office all the time," he said.
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