Alex Santos and Peter Kassabov previously built and sold three businesses together, but their latest accomplishment is a first for either of them.
Fortress Information Security LLC, the Orlando-based cybersecurity company founded by Santos and Kassabov, raised $125 million from funds managed by the asset management division at New York-based banking giant Goldman Sachs Group Inc. (NYSE: GS). The funds will help Fortress expand its work with U.S. military customers, Kassabov, co-founder and executive chairman, told Orlando Inno.
Meanwhile, the 200-person company expects to create hundreds of jobs this year, Chief Operations Officer Betsy Soehren-Jones said. “We’re expected to double, if not triple, our growth over the next three to five years. That’s an incredible amount of high-paying jobs in tech.”
'Goldman-worthy' business
Fortress wasn’t in search of money when Goldman Sachs came calling in November.
The 7-year-old firm manages supply chain risk, focusing on critical infrastructure that includes utilities, defense and the oil and gas sector. Fortress originally told Goldman Sachs representatives the company wasn’t interested in an investment deal, but the investment bank recognized big opportunities in the arenas of critical infrastructure and cybersecurity.
Will Chen, managing director at Goldman Sachs Asset Management, in a prepared statement said Fortress’s platform is “unmatched” in depth and breadth. “We believe there is a meaningful opportunity to accelerate the expansion of the platform into compelling product adjacencies, including software and hardware bill of materials, workflow orchestration and additional analytics and reporting capabilities.”
Meanwhile, the reputation of Goldman Sachs, which has $2.5 trillion in assets under management, caught the attention of the Fortress leadership team, Kassabov said. “If it was anybody else but Goldman, we probably wouldn’t have continued the conversation. Goldman really validates the hard work of the Fortress team. We’ve built something Goldman-worthy.”
Foley & Lardner LLP and Goodwin Procter LLP acted as legal advisers in the deal. DBO Partners acted as financial adviser to Fortress, and Goldman Sachs & Co. LLC was financial adviser to Goldman Sachs Asset Management.
The deal not only is significant because it supports the creation of high-wage jobs in the community, it’s also one of the biggest investment rounds raised by a Central Florida company in recent memory. In fact, $125 million is more money than all metro Orlando companies collectively raised in all but two quarters since 2014, according to PitchBook.
Defense growth
Fortress is an industry leader when it comes to utilities, helping protect 40% of the U.S. power grid. Thanks to an infusion of cash from Goldman Sachs, Fortress will ramp up its work for the Department of Defense.
That includes working with the U.S. Army, Navy and Air Force. In fact, Fortress is working with the Air Force on some of its simulators, Kassabov said. “Being located in Orlando became very serendipitous, because Orlando is the simulation capital of the world.”
Fortress now has raised at least $137 million from investors. Existing investors include Kassabov and Santos, ClearSky, First Analysis, American Electric Power, Caron Capital, KMMT Capital and Moquin Capital; They all will continue to support Fortress as investors.
There’s an ever-increasing emphasis on cybersecurity across industries as the number of incidents climbs every year. The Federal Bureau of Investigation in its Internet Crime Report stated there were more cyber complaints in 2021, amounting to $6.9 billion in reported losses, than in any of the previous four years.
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