Nozomi gears for expansion in OT/IoT security, with $100 million pre-IPO funding round

Industrial cybersecurity vendor Nozomi Networks secured on Monday a US$100 million pre-IPO funding round that would set the pace for the enhancement of the company’s product portfolio in the evolving OT/IoT security market in industrial and critical infrastructure environments. 

With ransomware and cyber intrusion attacks on organizations and critical infrastructure at an all-time high, Nozomi plans to expand its customer and partner support, and increase marketing and training services, as it enhances its products and technologies to address new challenges facing enterprises and critical infrastructure. The company provides network and asset visibility, threat detection, and insights for OT/IoT security environments.

Nozomi’s latest funding round comes following a record year of growth in 2020, with a 110 percent increase in annual recurring revenue, two times increase of its customer base, and a 5,000 percent growth in the number of devices its solutions monitor, as the company improves focus on the OT/IoT security segment.

The funding round was led by growth investor Triangle Peak Partners, who was joined by other prior investors, including GGV Capital, Lux Capital, Energize Ventures, Planven Entrepreneur Ventures, and Activate Capital. The funding round also included investments from commercial partners Honeywell Ventures, Keysight Technologies, and Telefónica Ventures, investments representing customers such as Dubai Electricity and Water Authority’s Forward Investments, and investor Porsche Ventures.

“As we began the fund-raising process, many of the largest ecosystem partners in the world along with our customers recognized Nozomi Networks as the industry leader and requested the opportunity to invest in the company,” Edgard Capdevielle, president and CEO of Nozomi, said in a media statement. “It’s the ultimate endorsement when not only a prestigious firm such as Triangle Peak Partners leads the investment, but customers and partners embrace Nozomi Networks and further validate our market leadership.”

While Nozomi has its roots in the OT environment, digital transformation is accelerating convergence in IT and OT environments. “With that comes an increase in device usage, including IoT devices connecting to IT and OT networks. This is where the future lies, and Nozomi Networks is poised to lead that evolving market as well,” Capdevielle, wrote in a blog post, on Monday. “We’ve made tremendous progress, and we’re just getting started. Nozomi Networks is in the growth stage of our company’s evolution,” he added.

“With the constant rise of cyber threats facing asset owners around the world, including critical infrastructure, customers are looking for better and more efficient ways to protect operating environments and reduce cybersecurity risk,” said Que Dallara, president and CEO, Honeywell Connected Enterprise. “Our investment reinforces the importance of our relationship with Nozomi Networks, and it will strengthen our ability to deliver a robust OT cybersecurity portfolio, supported by Honeywell’s global professional and managed security services.”

“Digitalization is changing and disrupting entire industries, including the automotive sector. Cybersecurity is playing a crucial and growing role for all companies and their internal processes and production facilities as cyber-attacks have become a serious threat,” said Stephan Baral, head of Porsche Ventures Region US. “This investment fuels advancements in precision OT and IoT Security as Nozomi Networks’ technology ensures optimal data security and network monitoring.”

Nozomi’s funding continues the momentum started in June by New York-headquartered company Claroty that secured ‘the largest investment ever made within the industrial cybersecurity sector,’ with its Series D financial round of US$140 million, taking the company’s total funding to $235 million. 

The critical infrastructure sector has in recent months been repeatedly hit by cybersecurity attacks, including the hack of a Florida water treatment facility, the SolarWinds supply chain attack, and the ransomware attack on Colonial Pipeline. These security incidents have led the U.S. government to take several measures, including a latest security directive that requires TSA-designated critical pipeline owners and operators that transport hazardous liquids and natural gas to enforce a number of urgently needed protections against cyber intrusions. 

Earlier, in April, the government announced a 100-day plan to modernize critical electric infrastructure using cybersecurity defenses with aggressive milestones, and assist owners and operators to deliver better detection, mitigation, and forensic capabilities. 

Malware, vulnerabilities targeting OT systems surge

Increasing threats of vulnerabilities are steadily rising, particularly in sensitive areas such as OT systems and network devices, putting vital infrastructure at risk, according to data released by Skybox Research

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