Darktrace - From Cybersecurity Start-Up To Unicorn

Darktrace has been named Europe's most promising billion-dollar tech company, and its European CEO says barriers to growth must be removed for firms to continue to thrive. 
 
The cyber security company, which was founded based on research carried out at Cambridge University, is the top ranking up and coming business in the Titans of Tech report published by investment bank GP Bullhound.  
 
The report analyses more than 400 European startups that have raised over $20m since 2014 to identify the top 50 companies with the most potential to become Europe’s superstar tech companies over the next two years. Darktrace, which saw its valuation hit $1bn earlier this year, tops this list. 
 
In 2013, ‘cyber defense’ company Darktrace was a newly established startup, founded by a group of Cambridge University mathematicians and digital security experts from both the UK and US.  
 
Fast forward to July 2018 and the company, currently valued at $1.25bn, has just announced a record year’s trading with contracts worth $400m secured.   
 
So how has a cyber security company made the journey from startup to unicorn status in such short space of time? 
Certainly the growing and increasingly complex threat posed by a broad range of malign actors, from organised criminal gangs to individual hackers or employees with a grudge, has focused boardroom minds on the need to buy in solutions that will keep the bad guys out of their systems. 
 
Its technology, which detects and repels cyber-attacks perpetrated from inside and outside enterprises, is used on a mass scale by global companies, government organisations and sectors such as education. One of its newest clients in America is a farsighted school authority.
 
Darktrace is a very effective tool that uses artificial intelligence to ward off cyber security threats. Here is how Darktrace helps to protect both corporate networks and cloud environments:
 
• It uses an enterprise grade AI technology that autonomously detects and fights back security threats.  
• With the help of its “Enterprise Immune System” that is inspired by the working of the human immune system, it leverages the power of machine learning technology for cyber defense. 
• The system sends automatic alerts when threats are detected within the environment with the help of its real time 3D threat notification interface.
• With the help of its advanced machine learning, the system can automatically detect what is normal and what is abnormal within networks.
 
Products like Enterprise Immune systems represent a new category of defense mechanisms to enhance corporate security.
 
A Simple Metaphor
One the great problems facing software companies, not just cyber security businesses, is that they often find it difficult to explain how their solutions will benefit potential buyers. Yes, they extol the virtues of their technologies in words that will be familiar to fellow digerati but, fail to tell a story that will impress (or even catch the attention of) the CEO or FCO who will ultimately be signing off on any deal.
 
For its part, Darktrace deploys a simple metaphor to get its message across. According to Nicole Eagan, the company launched on the market at a time when cyber security was all about the firewall. 
 
“It was all about keeping the bad guys out,” she says. “But a lot of time the threat is from an insider, such as an employee, or someone who had managed to get inside the system.”
 
So Darktrace styled its product as a digital equivalent of the human immune system. Just as the human body detects the presence of germs and microorganisms and sends white blood cells to see them off, the Darktrace system is designed to identify unusual activity in a network, allowing action to be taken. Dubbed Antigena, the product has a distinct biological ring to its brand.
 
Less biological perhaps is the company’s focus on Artificial Intelligence to create a system that learns as it defends from attacks
 
Address The Big Markets 
Arguably the UK is not a bad place to start a cyber security company.  According to Government figures the value of the domestic market comes in at around $5bn and is the largest in Europe. 
And as the threat of commercial cyber-attack and digital warfare become more intense, policymakers have come up with a five-year plan intended to establish Britain as a security industry leader and exporter of solutions. Darktrace was focused on international markets from the get go.
 
“Right off the bat we intended to expand globally,” says “Eagan. So while the R&D is carried out in the UK we also opened with an office in San Francisco.” 
 
From that launch with bases in the UK and US, the company has opened 31 offices around the world in order to get close to customers.
 
Demonstrate the Product
The biggest challenge facing software companies selling into the enterprise market often lies in establishing credibility with buyers.
 
In that respect it probably helps to have former spies involved. “The company has six founders, drawn from GCHQ (the UK’s listening post and a center of cyber security excellence), MI5, the academic world and business,” says Eagan.
That kind of provenance is probably enough to get the attention of buyers but the key to making sales has been, at least in part, a policy of demonstrating the effectiveness of the solution in real world situations. 
 
“We offer a 30-day trial. We can show potential clients the vulnerabilities they have missed using their existing security tools.”
 
Once breaches have been identified, in real time, the system alerts IT staff. In addition, buyers can also opt for an automated response.  As things stand, Darktrace is in place to defend around 7,000 networks in Europe, North and Latin America, Asia and Australia. 
 
An Evolving Business Case
As Eagan sees it, Darktrace has been helped by an evolution in the way businesses think about cyber security. For one thing, there is a need to protect not only digital networks, but often crucial physical systems they control - such as power networks. More generally, it’s increasingly thought of as concern for the whole organisation, rather than just the IT security team.
 
“People are coming at cybersecurity from a business perspective,” she says. “For instance, we have been approached by people who are in M&A situations.”
 
As she explains, security then becomes part of the due diligence or post-merger scenario when it is essential to ensure that unfamiliar networks are secure. Meanwhile, the requirements of the EU’s GDPR legislation, which requires all businesses to not only protect consumer data but also report any breach with 72 hours, is also helping Darktrace catch the attention of buyers.
 
Ultimately, maintaining an upward trajectory, the company 2017/18 figures show growth of 100%, requires a commitment to stay ahead of the criminals in terms of their ability to innovate. Thus healthy spending on R&D is vital. 
 
In the meantime, the company’s success illustrates the opportunities open to cyber security startups at a time when the digital threat is a boardroom issue.
 
Forbes:      Business Weekly:      Cambridge-News:      LondonEnomic
 
You Might Also Read: 
 
Darktrace Forms Cybersecurity Partnership With Siemens:
 
UK Cybersecurity Firm Sophos Is Trouncing Silicon Valley:
 
Alphabet Launches A Cybersecurity Company - Chronicle:
 
 
 
 
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