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Cisco Heads Cybersecurity Startup Exabeam’s $30 Million Funding Round

Feb 07, 2017

Nir Polak has a playbook.

The CEO and co-founder of Exabeam, a San Mateo, Calif.-based cybersecurity firm, is charting the course of his company with the trajectories of past business successes in mind. Namely, he's preoccupied with the rise to prominence of Palo Alto Networks (panw), a prosperous cybersecurity company he cites more than once in an interview with Fortune.

Best known for its "user behavior analytics," a security product category that involves monitoring what people are doing on corporate networks, Exabeam recently began shifting into another, more established market segment. The firm has gradually started to take on SIEM, or security information and event management, an area of digital defense that involves combining and processing all of the security data generated by a company's computers into a central repository.

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Instead of barreling right into SIEM and directly challenging larger incumbents, such as Splunk (splk), IBM's (ibm) QRadar, and Hewlett Packard Enterprise's (hpe) ArcSight, Exabeam first released what Polak calls a "SIEM helper." That initial tool, which Polak describes as a "machine learning brain," supplemented, rather than replaced, existing tech—allowing the firm to gain a foothold inside customers' IT environments.

It's a move ripped right from Palo Alto Networks, which first used a "firewall helper" to gain traction, learn, and then upturn the market for computer firewalls.

"We're going to do to SIEM what Palo Alto Networks did to firewalls," Polak declares, betraying no lack of confidence in the strategy.

Now the gloves are coming off as Exabeam prepares to go head to head with longer-tenured rivals. The company said Tuesday that it raised $30 million in venture capital funding in a round led by Cisco (csco) Investments and Lightspeed Venture Partners.

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The "series C" round of fundraising adds to the $35 million Exabeam previously landed from Icon Ventures, Aspect Ventures, Norwest Venture Partners, and investor Shlomo Kramer, a veteran of the industry who co-founded two security stalwarts, Check Point Software (chkp) and Imperva (impv). (Polak formerly served as a product strategist at Imperva.)

"The SIEM market hasn't really worked," says Karthik Subramanian, head of cybersecurity at Cisco Investments, on a call with Fortune. What's needed, he says, is an "analytic approach"—one that blends security, intelligence, and automation—in the way that Exabeam has, in his view, "really mastered."

Ravi Mhatre, a partner at Lightspeed who joined Exabeam's board of directors as part of the funding deal, adds that Exabeam is "going right after the heart" of the SIEM market. According to 2014 report from the research firm Markets and Markets, the SIEM market will total more than $4.5 billion in 2019.

The combination of Cisco and Lightspeed in Exabeam's latest investor set bodes well. The pair of companies last month struck a $3.7 billion deal when Cisco bought AppDynamics, an IPO-bound tech "unicorn," or startup valued at more $1 billion or more, in Lightspeed's portfolio mere hours before the firm planned to list on the Nasdaq stock exchange.

(Cisco has been awfully acquisitive in the past couple of years when it comes to security firms, as Fortune's Jonathan Vanian has noted.)

Now Polak says his objective is to scale Exabeam, expanding internationally, boosting sales and marketing, and investing in R&D. He says that the company's SIEM helper, the tool that started it down this path, has already "caught fire," having been installed in 120 corporate networks over the course of a year.

But if Polak is planning to match his obsession—the ascendance of Palo Alto Networks, which grew its stock price threefold to roughly $150 per share since its public market debut in 2012—then the fight's not over. "We have to continue to innovate and make sure we stay up to date," he says.

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