As cyberattacks rise, so do the coffers of firms that fight them.
Blackpoint Cyber, which helps small and midsize businesses fight off hackers, just raised $190 million in a round led by Bain Capital, they told Fortune exclusively. Accel also participated in the Series C which saw Adelphi Capital Partners, Telecom Ventures, Pelican Ventures, and WP Global Partners take part. In all, Blackpoint has raised $216 million, according to CEO Jon Murchison, a former National Security Agency computer operations expert.
Murchison founded Blackpoint in 2014 when the company mainly focused on government work. It wasn’t until 2019 that the startup entered the commercial space. Blackpoint‘s managed detection and response software aims to discover and neutralize cyber threats as they happen, Murchison said. Blackpoint’s goal is to never let its thousands of customers experience an attack, to keep them “left of boom,” which refers to the military’s attempts to detect IEDs and detonate them harmlessly.
“If we catch anything or see anything, we take active response to keep bad guys out of the network,” Murchison said.
Hackers are finding it easier to attack further downmarket, said Dewey Awad, a partner at Bain Capital, who led the investment for the private equity firm.
That’s why Blackpoint focuses on small to midsize businesses, which usually get lots of attention from bad guys because they’re not as sophisticated, Murchison said. He wouldn’t provide names, but Blackpoint clients include everything from state governments to law firms to manufacturers. Blackpoint is the first company to do live responses to potential attacks on Microsoft 365, Murchison said.
Blackpoint is very close to profitability and growing by 100% each year, Murchison said. The company plans to use the new funds for R&D and to increase market scale. The startup hopes to add 50 people this year, bringing staff to about 200, Murchison said.
Fundraising for Blackpoint’s Series C began in February, although it was not a formal process. “We had a lot of inbound interest. There were tons of growth equity companies looking,” said Murchison who declined to provide a valuation. Blackpoint is the latest cyber firm to raise capital. In May, Huntress collected $60 million in a Series C led by Sapphire Ventures, Fortune reported.
Like Accel, which has invested in CrowdStrike, Bain Capital has much experience in cybersecurity. Deals include Blue Coat, which was sold to NortonLifeLock, Barracuda Networks, Solar Winds, and InAuth, which American Express acquired.
Bain Capital’s Awad has big plans for Blackpoint including a possible IPO. But that depends on the new issues market returning, whenever that happens. “Assuming [Blackpoint] will be big enough someday, that will be the type of company that is well received in the public markets,” Awad said.
Bain’s investment came from its Bain Capital Tech Opportunities Fund II, which closed on $2.4 billion in February. The growth pool, which sits between venture capital and buyout, focuses on software companies in sectors such as infrastructure and security, health care IT, financial technology, as well as vertical and horizontal applications. Bain Capital Tech Opportunities Fund II typically invests from $75 million to $250 million equity per deal, with an average check size in the $150 million range, Awad said. After the Blackpoint transaction, Tech Opportunities Fund II will be about 25% invested.
Awad said he continues to see down rounds for mid- to late-stage venture-backed companies which are using structure and financial instruments, like convertible debt, dividends, and liquidation preferences, to keep the headline multiple the same. “There’s lots of financial engineering used to represent the same headline value even though the cost of capital provided is less,” he said. But he is feeling more positive about the overall VC sector. “We are seeing the market pick up a little bit. We feel that good companies that raised previously at good prices are back in the market to advance their businesses. There are lots of green shoots,” Awad said.
See you tomorrow,
Luisa Beltran
Twitter: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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