Investors pumped $27 million into Baltimore cybersecurity company ZeroFOX to accelerate sales of its software that detects hackers who attack via social media.
Highland Capital Partners was the lead investor, joining New Enterprise Associates, Genacast Ventures and Core Capital Partners, which poured $11 million into the company last year. Highland has offices in Silicon Valley and in Boston.
ZeroFOX CEO James C. Foster said the company plans to use the cash largely to hire salespeople, but also to invest in technology. The investment is larger than what similar cybersecurity firms have received before going on to Wall Street stock offerings, he said.
"I think our investors want to see more value and really unleash the value of the company," Foster said. "The full expectation is we're on to something here that's significant and meaningful, and they want to give us enough room to run."
ZeroFOX launched in 2013, focused on helping companies and government agencies patrol LinkedIn, Facebook, Instagram and other social media sites for hackers looking to sneak into secure networks through phishing schemes or malware.
It has nearly 100 employees, a milestone Foster said he expects to hit by the new year. About 85 percent of them work at ZeroFOX's Federal Hill headquarters.
Other new ZeroFOX investors include Avi Rubin, a computer science professor at the Johns Hopkins University; Lane Bess, former CEO of Palo Alto Networks, a Silicon Valley cybersecurity firm with a $16 billion market capitalization; and Tim Eades, CEO of Silicon Valley security company vArmour.
With the latest fundraising, investors have given ZeroFOX $40 million.
Investors are flocking to the cybersecurity industry in general, and Baltimore-area firms in particular have seen a surge of interest and cash. Columbia-based Tenable Network Security landed a record-setting $250 million investment last month. Former NSA Director Keith Alexander's IronNet Cybersecurity said in October it had received a $32.5 million investment.
Corey Mulloy, a general partner at Highland who is joining ZeroFOX's board of directors with the investment, said he had to fight other Silicon Valley investors for a chance to back ZeroFOX.
Foster said it was a goal to find a West Coast investor to lead the company's second major round of fundraising.
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Mulloy, who is based in Palo Alto, Calif., said while some parts of the security software industry may be overvalued, he thinks ZeroFOX is unique.
"Anytime there's been a new digital platform followed by security breaches, it requires a security solution to counter them," Mulloy said. "There's no arguing social media has become the new digital platform."
It could be a large enough market to eventually lead ZeroFOX to an initial public offering on Wall Street, he said.
For now, though, the company and its advisers are focused on meeting the demand of companies and government agencies increasingly concerned they might be the next victim of a massive data breach.
"I think we're more relevant now than we've ever been," Foster said. "I think the technology is to the place that we can become the standard when it comes to social media security."