Boston-based cybersecurity ratings startup BitSight raised $60 million in Series D round led by private equity giant Warburg Pincus, with participation from existing investors including Menlo Ventures, GGV Capital and Singtel Innov8 with an estimated valuation of $600 million. BitSight will use the proceeds for "rapid global expansion and extend its portfolio of market-leading security risk management solutions."
When launched in 2011, BitSight's product was first of its kind. "When BitSight introduced the first Security Ratings Platform in 2011, we set out to transform how businesses evaluate risk and security performance," said CEO Tom Turner in a statement. But the market looks different today -- BitSight is going head-to-head with worthy opponents. Other companies offering similar products include SecurityScoreCard whose investors are Sequoia Capital, Nokia, Intel and Moody's. SecurityScoreCard's claim to fame was when it analyzed the cybersecurity health of more than 500 state, local and federal government entities and claimed that the government's cybersecurity program is worse than a fast food joint's.
BitSight’s investment round comes on the heels of FICO, the credit-scoring company, announcing that it will offer cybersecurity ratings to companies worldwide for free. Although FICO's cybersecurity ratings product is fairly new, its natural advantage here is that the company has been in the credit scoring business for 62 years. And BitSight CEO Tom Turner admits that cybersecurity ratings work a lot like credit scoring. Bitsight uses "an approach similar to credit ratings for financial risk,” Turner was quoted as saying in TechCrunch, where BitSight takes in account external data, user behavior and public disclosures to calculate scores.
That said, this a business in which opportunities abound -- Gartner predicts that by 2022, cybersecurity ratings will become as important as credit ratings when assessing the risk of business relationships. Additionally, in June last year, the U.S. Chamber of Commerce along with a consortium of more than two dozen chamber member companies, including prominent big banks, big-box retailers, and technology giants released a set of principles designed to promote fair and accurate cybersecurity ratings -- Principles for Fair and Accurate Security Ratings.
But that's not without reasonable threats from growing competition; there are over a dozen startups in the cybersecurity space, each clamoring for a bigger piece of the pie, especially in Boston, which has emerged as a cybersecurity hub over the last few years. When it comes to Boston though, BitSight is a prominent player -- the company doubled down on office space earlier this year. The company claimed to take over two floors totaling 48,000 square feet of space, either in the fourth quarter of this year or the first quarter of 2019 and is hiring for roles in product, sales, data science and security research.
