The steady drumbeat of digital criminal attacks—against companies ranging from British Airways to Reddit—is raising the profile of the cyber security industry. A fast-growing startup in that sector is Darktrace, whose valuation has increased more than 30% in the past four months to $1.65 billion.
The firm said today that it raised $50 million in new funding, bringing total funds raised to $230 million. Darktrace, which is based in Cambridge, England, and San Francisco, has used the money to grow aggressively, and its headcount has jumped 60% in the past year to more than 750 employees worldwide. Its systems are now used on 7,000 networks, including London’s Gatwick Airport and AIG, the global insurance company.
The artificial intelligence company’s growth highlights the demand for sophisticated defenses against hackers as well as Europe’s increasing capacity to spin up top-tier tech companies. “What drives the valuation is our response to the things covered in the media,” said Darktrace CEO Poppy Gustafsson in an interview. The five-year-old tech company was created by University of Cambridge mathematicians, and its software is designed to monitor everything from cloud networks and internet-of-things devices to industrial control systems.
Cyber security is in demand for good reasons. As more data is kept online, the potential for breaches is increasing. At the same time, more of our devices are connected to the internet, giving hackers new ways to snoop on corporate board meetings, spy on political activists, or even damage important utilities. Data theft costs companies an average of $3.9 million, while “mega breaches” of more than 1 million compromised records can cost businesses as much as $350 million, according to a study sponsored by IBM Security and conducted by the Ponemon Institute.
To make matters worse for hacking targets, the demand for cyber security expertise far outstrips supply. The industry is forecast to fall 1.8 million workers short of what’s needed by 2022, according to Frost and Sullivan.
“There aren’t enough humans to respond to the scale or the speed of the attacks,” Gustafsson said. The startup’s AI software isn’t meant to replace cyber security workers, but rather it’s designed to make them more efficient and respond at “machine speed.” She says its systems can identify threats autonomously so security professionals can think about the bigger picture.
The company deploys its software free of charge to demonstrate its usefulness. It takes an hour or less to install and then the system sets about learning what is “normal” for the clients’ network. That baseline allows it to detect what’s foreign, similar to how an organism’s immune system works. The CEO says it finds something that was previously undetected about 99% of the time.
Darktrace says it can detect a breach (from an infected email, for example) and automatically switch off connections to the rest of the network to stop a malicious program from spreading. The latest version of its Antigena software is meant to go a step further, detecting patterns and stopping similar threats before they spread. Gustafsson says this will be increasingly important as hackers themselves employ AI in their cyber attacks.