Since SaaS emerged as a viable enterprise model over a decade ago, IT directors have lost sleep many nights worrying how to secure the ever-growing, ever-morphing, perimeter-less network known unassumingly as the 'cloud'. And that challenge is only getting more complex by the day.
Ten years ago, there were two SaaS vendors with marketcaps over $1B. Today, there are 24 companies in that category, and SaaS companies account for one-third of the software industry. There are tens of thousands of enterprise apps, with industry leaders like Dropbox and emerging players such as Zuora and Zendesk. Not surprisingly, securing corporate data in the age of the cloud is going to be big business. Gartner expects the cloud security market to double from $2B in 2013 to $4B in 2017.
Today, I'm excited to announce that Index Ventures has led a $15M Series B round in Adallom, a security company that leverages artificial intelligence and massive-scale data analytics to detect anomalies in individuals' data usage patterns across more than 39,000 different SaaS applications. We invested in Adallom for two main reasons: an incredible team and a breakthrough technology.
Adallom's founders, Assaf Rappaport, Ami Luttwak, and Roy Reznik have the kind of pedigree that instantly commands respect in the security industry. The founders, as well as 80% of the team, have all been members of the Israeli Defense Forces' elite cyber security agency. These guys were responsible for protecting Israel from the most advanced cyber terrorist attacks. But they aren't just tech-geeks. When I met the founders for the first time, I ended up cancelling all my other meetings for the day to talk with them for hours about the market opportunity for their technology. I got caught up in their creativity, openness and enthusiasm for collaboration. We met again the next day and the next, and signed a term sheet within days. Not only are the founders committed to becoming a multibillion-dollar global security company, they have a clear, realistic roadmap to get there.
Adallom's algo's automatically, intelligently, and autonomously scan massive quantities of data to detect slight change in user behavior from among hundreds of millions of log events. Instead of trying to secure the network, the application, or the device - all of which are too fluid to monitor with any accuracy - Adallom's technology provides security on an individual user level. Since each person uses a set of SaaS applications differently, Adallom's platform creates a unique behavioral model for each user and alerts the system when a user acts in a manner unlike him/herself. This user-level intelligence goes far beyond mobile device management, instead automatically detecting minute changes in meta-data for each person's app usage, no matter which device they use. This type of mathematical modeling can detect threats as diverse as a hacker from China spearfishing an employee's identity, or anomalous download patterns that point to an employee trying to steal company data.
The purity and simplicity of Adallom's approach belies an incredible amount of technology development on the backend, and it's the only viable way to 'secure the cloud' going forward. By giving IT administrators a single point of control and complete 360-visibility into each user's interactions with each cloud app, Adallom removes the need to 'secure the perimeter'.
We're incredibly excited about our investment in Adallom. I look forward to joining our new partners - Gili Raanan (Sequoia) and Zohar Zisapel - on the company's Board of Directors and to working closely with Assaf and his team to help build the next great security company.