App Security AI Company Wallarm Locks Down $8M Series A
On#nbsp;Monday, application security company Wallarm announced it#nbsp;raised a#nbsp;Series A#nbsp;round. The $#nbsp;8 million deal was led by Toba Capital; Partech, Gagarin Capital, and Y#nbsp;Combinatorparticipated in#nbsp;the round. This new deal brings Wallarm’s total funding to $#nbsp;10.8 million, according to#nbsp;the company and Crunchbase data.
In#nbsp;addition to#nbsp;funding, the company said it’s nearly doubled the number of#nbsp;customers it#nbsp;serves in#nbsp;the past year. Wallarm says it#nbsp;grew recurring revenue by#nbsp;100 percent, year-on-year, in#nbsp;Q3 2018 as#nbsp;well.
Commenting on#nbsp;the new funding, Wallarm co-founding CEO Ivan Novikov observed in#nbsp;a#nbsp;statement from the company that, "Many companies in#nbsp;Silicon Valley strive to#nbsp;raise vast sums of#nbsp;money, but strategically, we’ve decided to#nbsp;only raise what we#nbsp;need and fund the rest of#nbsp;our growth organically."
The company’s last funding came by#nbsp;way of#nbsp;a#nbsp;Partech-led $#nbsp;2.3 million venture roundannounced in#nbsp;December 2016. At#nbsp;the time, the company told TechCrunch that it#nbsp;became profitable during Summer 2016. A#nbsp;representative from the company said the company has fluctuated in#nbsp;and out of#nbsp;profitability since then. Because Wallarm is#nbsp;taking on#nbsp;sales and marketing staff, the business loses money today, but hopes to#nbsp;return to#nbsp;profitability shortly.
As#nbsp;part of#nbsp;the Series A#nbsp;transaction, a#nbsp;number of#nbsp;individuals will be#nbsp;joining the company’s executive team and its various boards. Speaking of#nbsp;sales and marketing: Johan Nordstrom, a#nbsp;former executive at#nbsp;Imperva and Arbor Networks will join Wallarm as#nbsp;its chief business development officer and HyTrust cofounder Renata Budko joined as#nbsp;chief marketing officer.
On#nbsp;the board side: Rajan Aggarwal, a#nbsp;partner at#nbsp;Toba Capital, will join the company’s board of#nbsp;directors. Reza Malekzadeh of#nbsp;Partech will join as#nbsp;a#nbsp;board observer. Wallarm is#nbsp;also beefing up#nbsp;its advisory board with the addition of#nbsp;two folks: LendingClub CISO Richard Seiersen and Randy Bias, who serves as#nbsp;Juniper Networks’s#nbsp;VP of#nbsp;technology and strategy.
In#nbsp;a#nbsp;statement provided to#nbsp;Crunchbase News, the company said it#nbsp;will use the proceeds from this round to#nbsp;accelerate its deployment into Fortune 1000 companies and to#nbsp;roll out its new FAST toolkit. Wallarm’s Framework For Automatic Security Testing (FAST) fits into companies' existing continuous integration (CI) or#nbsp;continuous deployment (CD) infrastructure and lets security researchers, developers, and quality assurance professionals generate hundreds of#nbsp;security tests to#nbsp;locate and reproduce vulnerabilities in#nbsp;application code using a#nbsp;simple scripting interface.
In a#nbsp;June 2018 profile of#nbsp;the company and its technology, Forbes quoted CEO Novikov about its toolkit: "Wallarm FAST takes existing manual or#nbsp;automated tests, like Selenium, and uses those as#nbsp;a#nbsp;basis for generating all the possible security tests out there. Security teams can then create a#nbsp;policy to#nbsp;chip off everything that doesn’t belong. The resulting set of#nbsp;tests runs automatically, making a#nbsp;great addition to#nbsp;the release acceptance criteria."
Apart from FAST, Wallarm offers a#nbsp;web application firewall product that doesn’t require manual configuration of#nbsp;threat detection rules. It’s a#nbsp;product sold to#nbsp;CEOs, said Novikov. FAST, on#nbsp;the other hand, is#nbsp;a#nbsp;product marketed to#nbsp;and priced for front-line engineering and#nbsp;QA teams.
Novikov admitted it’s a#nbsp;bit unusual for a#nbsp;startup to#nbsp;have two products in#nbsp;the market at#nbsp;once. Novikov said both pieces of#nbsp;software are built around the same core engine. "If it#nbsp;weren’t, we’d have to#nbsp;hire a#nbsp;dozen engineers for each product," said the chief executive of#nbsp;the 55-person company. Wallarm’s built-from-scratch technology is#nbsp;flexible and extensible, allowing the company to#nbsp;slide into other market verticals like network and endpoint security.
The application security market is#nbsp;consolidating rapidly. On#nbsp;October 10th, publicly-traded application security firm Imperva, the market leader, sold to#nbsp;Thoma Bravo for $#nbsp;2.1 billion. And, one week ago, app firewall company tCellannounced its sale to#nbsp;Rapid7 for an#nbsp;undisclosed sum. Novikov told Crunchbase News that he’s fended off four acquisition attempts in#nbsp;the past two years.
Wallarm is#nbsp;an#nbsp;example of#nbsp;the other approach to#nbsp;raising venture funding. Rather than chasing vanity valuations or#nbsp;attention-grabbing fundraising figures, the company is#nbsp;trying to#nbsp;use its own financial momentum to#nbsp;expand. Now five years old, Wallarm was founded in#nbsp;2013 by#nbsp;a#nbsp;group of#nbsp;former white hat hackers who previously worked with Russian companies like Yandex and Mail.ru identify and mitigate security threats. The company and participated in#nbsp;Y#nbsp;Combinator’s Summer 2016 batch.
Instead of#nbsp;raising and torching countless millions in#nbsp;VC money in#nbsp;the name of#nbsp;moving fast and breaking budgets, Wallarm took its time to#nbsp;mature into an#nbsp;actual business, which is#nbsp;a#nbsp;lot more than one can say about many companies in#nbsp;the Bay Area.