Webroot and the Elusive Security IPO

I read this article about how Webroot hired a new CEO. Some of the blog speculation is that this new CEO hire is a tune-up to an upcoming IPO filing. One of the interesting things to consider is that information security was the “web 2.0” of 2003 — many companies got funded and there was the belief that there was a deep market of buyers for start-ups. Since then, a lot of things have changed. McAfee and Symantec have cooled off and are struggling a bit. Microsoft is poised to enter the market, which could have a profoundly negative impact on the ability for folks selling to consumers to eke out a profit.

What’s interesting, however, is that there are a lot of information security companies who have raised a fair amount of money and, as such, would most likely be looking to an IPO as a good way to return money back to their investors. With the IPO market for tech companies beginning to come back, there ought to be at least a few companies who have raised a decent amount of venture capital. I decided to take a crack at compiling a list of all of the information security companies I could find that had raised more than $30 million in venture financing in their lifetimes. Below is a list (and I am sure it’s incomplete) of companies who fit the bill:

Vontu
Infoblox
Fortinet
Webroot
IronPort
Sourcefire
Finjan
Facetime Communications
Ingrian Networks
Mirapoint
Proofpoint
Barracuda Networks
Skybox Security

The point of this brief post is that there are quite a few well-funded private information security companies who are probably coming up on interesting times. The market dynamics are changing (new entrants, less M&A, but a more accessible IPO market) and it will be interesting to see how these companies respond.

For what it’s worth, I think it will be tough for Webroot. I use Webroot’s product on one of my PCs and think it’s great. But I also think there are a lot of consumers out there who would take a free product from Microsoft (or a virtually free product bundled with an anti-virus or anti-spam product) over a separate offering. There are obviously customers who do care enough to buy a strong product like Webroot’s but I have some doubts about how deep that market is. The debate around Sourcefire and Fortinet will be much more interesting, I suspect.

  • diddly doo

    Nice list Charles, just wondering which of these companies would be forced to exit asap due to the economic conditions. In my mind, you'd think that someone will snap up Webroot soon for a bargain price… the question is…. who…

  • diddly doo

    Nice list Charles, just wondering which of these companies would be forced to exit asap due to the economic conditions. In my mind, you’d think that someone will snap up Webroot soon for a bargain price… the question is…. who…

  • Thanks for the comment. I'm not sure who would pick some of these folks up – the market for security M&A had ground to a halt even before the economic downturn. Symantec picked up Vontu and Cisco picked up IronPort.

  • Thanks for the comment. I’m not sure who would pick some of these folks up – the market for security M&A had ground to a halt even before the economic downturn. Symantec picked up Vontu and Cisco picked up IronPort.