Cybereason Lands $25M Funding, Partnership With Lockheed Martin; Look Out, Raytheon And Websense

Less than a month after defense contractor Raytheon announced its intent to acquire security software maker Websense for $1.9 billion, its competitors are stepping up, with Lockheed Martin signing a partnership and strategic investment with real-time threat detection company Cybereason.

The $25 million Series B funding round, announced Wednesday, was led by Spark Capital and included a multimillion-dollar strategic investment from Lockheed Martin, a $45.6 billion Bethesda, Md.-based defense contractor. Existing investor CRV also participated. The latest round adds to the $4.6 million raised in Cybereason's Series A round in February of last year.

Cybereason is a Cambridge, Mass.-based endpoint detection and response company that was co-founded in 2012 by former members of the Unit 8200, Israel's equivalent to the NSA. The Cybereason solution, which gives full visibility into a company's environment by identifying the root cause, timeline, end points affected and tools behind an attack, is what CEO and co-founder Lior Div called a "super analyst in a box." The value proposition for clients, he said, is gaining full visibility into the lifecycle and magnitude of an attack, because you can't stop an attack if you don’t know where it is.

[Related: Raytheon Aims For Commercial Security Market With $1.9B Websense Acquisition]

Alongside the strategic investment, Lockheed Martin will also extend its partnership with Cybereason and integrate its solution across its cybersecurity offerings.

’The Cybereason platform is an outstanding complement to the tradecraft and technologies Lockheed Martin uses every day to defend our network and our clients,’ Rich Mahler, director of commercial cyber services at Lockheed Martin, said in a statement. ’Its real-time detection and attack tracing capabilities enable us to effectively leverage threat intelligence and provide our government and commercial customers with a calculated, strategic approach to cyber defense. In addition to deploying Cybereason internally and partnering with it, we also participated in this latest round as a strategic investor.’

Div said the company's partnership with Lockheed Martin, as well as the Websense-Raytheon deal, show the need for a "different type of relationship" between the commercial market and cybersecurity companies: Whereas in the past, the two groups operated fairly separately, they now need to start working together much more closely as the threat landscape escalates.

"I think all of them understand what we understand: In the market outside of the government, outside of the defense, this is a huge market with a huge need. Nobody else is going to provide a solution to the market if it's not the people who have the know-how," Div said.

"This is not the straightforward dynamic that we are usually seeing. It's not just about the money, it's something bigger. We have a bigger problem in front of us when it's tied to the cybersecurity problem. That’s why we see the government getting involved, pushing the agenda around cybersecurity. I think right now you're seeing that engagement or transactions are part of something even bigger than the defense contractors themselves," he continued.

However, in this environment, Div said, he believes a partnership between Lockheed Martin and Cybereason will be more effective than an acquisition, something he said in past examples "didn't work very well."

Div said Cybereason is looking to build more channel partnerships across the industry. Other than Lockheed Martin, the company has three partners, he said.

"We think that as part of our go-to-market strategy, we will have to have very solid partners. I don't believe that in order to penetrate the market at once, you can do it alone, especially when you're a startup. You need a relationship that gets it, can be aggressive and can go to market with you. For us, this is a big chunk of our strategy," Div said.

In order to build its partner base, Div said, Cybereason is investing in adding more direct salespeople to enable partners to sell its solutions as well as investing in development to make the product easier to use.

In addition, Div said, the latest round of funding will be put toward growing the company's go-to-markets strategy. That includes investments in R&D as well as sales and marketing.

PUBLISHED MAY 6, 2015