After years of growth, funding for cybersecurity startups is beginning to slow down, a symptom of the broader economic malaise and — perhaps — market oversaturation. According to a recent note from Pinpoint Search Group, cybersecurity funding dipped 55% in Q2 2023 compared to Q2 2022 — a steep decline by any measure.
At the same time, the cybersecurity market continues to outpace the broader tech market. That same Pinpoint memo found that the cybersecurity sector underwent 12.5% year-over-year growth in Q1 2023.
As something of a case in point, Netcraft, a cybercrime detection firm headquartered in the U.K., today announced that it raised $100 million in a funding round led by Spectrum Equity, a Boston- and San Francisco-based private equity investor focused on services businesses. The tranche is Netcraft’s first since its founding in 1995, and will be put toward growing the company’s range of services, talent acquisition and customer success efforts.
“New types of cybercrime are constantly emerging and becoming increasingly complex,” Ryan Woodley, Netcraft’s newly appointed CEO, told TechCrunch via email. “We’re investing in both the product and people to accelerate progress toward our mission of detecting and disrupting cybercrime at scale to create a safer online experience for all internet users.”
Launched in 1995 by Mike Prettejohn, Netcraft offers a range of subscription-based cybercrime detection, disruption and takedown services. The company leverages AI to detect, validate and combat online threats such as brand infringement, phishing, executive impersonation and fake ecommerce sites.
For example, Woodley says, Netcraft uses AI to engage with bad actors “at scale,” particularly the perpetrators of investment, cryptocurrency and money transfer scams, and collect information that can then be used to help take those actors down. Netcraft customers can access reporting through the company’s portal or APIs that integrate with their internal systems.
“Netcraft uses machine learning to train our classification models used to identify attack types,” Woodley explained. “Attack methods employed by bad actors vary in composition and complexity over time, and machine learning helps us employ constantly optimized models to accurately detect these attacks in real time and avoid false positives.”
Beyond providing automation services, Netflix maintains a “threat intelligence feed” that covers cybercrime targeting major institutions, and conducts a web survey that holds data on an estimated 1 billion websites. Data from both the feed and survey allow Netcraft to gain insight from historical trends and correlate this with real-time data collected from a range of third- and first-party sources, Woodley says.
“Through extensive automation backed by human insight and technical expertise gathered over decades of working in the space, Netcraft is able to achieve scale and coverage that would be hard to replicate by an internal information security team,” he added. “There are simply not enough hours in the day to effectively manage the volume of existing threats to information security, let alone staying one step ahead of emerging threats.”
Is it all marketing hyperbole? Maybe so — to some degree at least. But Woodley isn’t wrong about the growing challenge in mitigating cybersecurity threats.
Phishing attacks alone increased by 48% in the first half of 2022, according to Security Intelligence. At the current rate, damage from cyberattacks will amount to about $10.5 trillion annually by 2025 — a 300% climb from 2015 levels.
Perhaps spurred on by this, customers, Woodley claims, are embracing Netcraft. The company says it serves hundreds of brands including 10 of the largest 20 banks in Europe, three of the largest four corporations worldwide and eight of the world’s largest governments.
The size of the client base was one factor in Spectrum Equity’s decision to invest in Netcraft, according to Parag Khandelwal, the private equity firm’s managing director.
“Netcraft is the most impressive cybersecurity business you’ve never heard of. That’s what got us excited about this company,” Khandelwal said in a statement via email. “They’ve been able to fly under the radar to build a truly distinctive product that solves a hard problem. They have an advanced automated solution which cripples millions of attacks each year. The level of effectiveness, speed, and scale is the best we’re aware of in the industry, which speaks to the hundreds of persistent blue-chip customers.”
To better accommodate the expanding customer base, Netcraft plans to grow its over-100-person team by 30% this year, Woodley said.
“As we’ve noted, cybercrime continues to grow in size and complexity and it’s not a problem that’s going away,” he continued. “Netcraft is a mission critical component of cyber defense strategy.”