Fidelity Invests $50 Million in 26-Year-Old’s Cybersecurity Startup
Mutual fund giant Fidelity is investing $50 million in Malwarebytes, a cybersecurity startup headed by 26-year-old CEO Marcin Kleczynski.
Kleczynski, a Polish-born immigrant to the United States, founded the company as a teenager. He decided to pursue his interest in computer security after accidentally downloading malicious software onto his home computer while in search of pirated video games, he tells Fortune.
Kleczynski developed early versions of the company’s first product, an anti-infection tool, with help from online collaborators while studying in college. Shortly thereafter he transformed that code into a business that creates digital shields and scans for detecting and removing cyber threats.
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Malwarebytes, based in Calif., sells subscriptions to its proactive anti-malware protection and other computer security software while offering its computer virus remediation services for free. The company has built a strong following in the consumer market with this “freemium” approach.
Since 2012, Malwarebytes has begun to shift gears in an attempt to acquire more enterprise customers—for whom its remediation services are not free. The company competes with other endpoint security providers, such as Intel’s (INTC) security division McAfee, Symantec (SYMC), Cylance, Bromium, CrowdStrike, and others.
Kleczynski says he doesn’t feel the least bit threatened by the competition; he maintains that his product works best in conjunction with other tools.
“It goes back to our original premise that we make whatever security solution you have better,” Kleczynski says. “Especially on this cold day,” he adds, having visited New York City during a particularly chilly spell, “you want as many layers as possible to keep you warm.”
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Malwarebytes runs on 250 million computers around the globe, about one fifth of which operate in business environments, according to Kleczynski. Some of the company’s big corporate customers include Verizon Wireless (VZ), Williams-Sonoma (WSM), Ernst & Young, and Deloitte.
The company last raised funding—a $30 million Series A round—from Highland Capital Partners in 2014. Although the company has been cash flow positive for the entirety of its existence, Kleczynski says, he took that money in order to hire a professional management team.
Kleczynski plans to use the latest round of funding in order to hire sales staff, since as much as two-thirds of the organization consists of engineers, he says. He says he believes that now is an opportune time to accept additional funds.
“I think it’s the right time to take money because I think some other security companies are going to ruin it for the rest of us,” Kleczynski says, alluding to the possibility of a market correction in the cybersecurity startup segment, which investors have poured money into for the past couple of years.
“The fact of the matter is that companies are spending tens of millions of dollars to out-market us—even if they’re just offering a point solution or a simple feature that’s been turned into a company,” Kleczynski says. “If their fundraising runs out, I’m going on a buying spree. I think there will be some great technologies or features up for sale that didn’t quite make it.”