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IoT Security Startup Claroty Raises $60M For Big Channel, Engineering Expansion

With over 40 partners now, the industrial Internet of Things security startup aims to have more than 50 percent of revenue come from the channel next year.

Claroty is getting so much interest from solution providers, it didn't have enough resources to support a broader channel program until the industrial Internet of Things security startup recently raised a $60 million financing round.

That's according to Claroty CMO Patrick McBride, who said the New York-based company will use the funding round, announced Monday, to expand engineering and sales and marketing efforts globally. The latter will help Claroty, which provides threat detection and monitoring for industrial control networks, reach its goal of having more than 50 percent of revenue goal come from channel partners.

"We're not having a shortage of opportunities coming our way," he said of Claroty's channel prospects. "For us it's the ability to get to all the opportunities. We weren't going to be able to keep up with demand."

The financing, which brings Claroty's total funding to $93 million, comes after the company in May launched its formal Vision channel program, which provides resources for training, education, support and sales assistance to managed services providers, systems integrators, value-added resellers and consultancies, among other groups that work with industrial customers.

"These are demanding customers because they're operating really expensive stuff so you can't walk in there and fake it until you make it," McBride said.

Led by Ramse Rogers, a channel veteran who previously worked at Securonix and Optiv, the Vision program is designed to support solution providers at various sizes, from small solution providers to big players like Dimension Data, ranked No. 9 on CRN's 2018 Solution Provider 500 list. McBride said the program has more than 40 partners now, which also includes Optiv, Oylo and INNO4.

Three of Claroty's biggest supporters have been Rockwell Automation, Schneider Electric and Siemens, all of which invested in Claroty's new funding round (the latter two did so through venture capital firms they had founded: Aster Capital and Next47, respectively). Rockwell uses Claroty's technology as the core of its operational technology and industrial controlled systems security while Schneider resells Claroty as the only threat detection provider in its Electric CAPP partner program. Siemens, on the other hand, sells Claroty as part of its anomaly detection offering and deploys it on the company's ruggedized PCs and network switches.

"It's frankly a huge endorsement of our technology," McBride said of the three companies. The round's other investors include Temasek, Tekfen, Bessemer Venture partners, Team8, Innovation Endeavors and ICV.

McBride declined to disclose revenue or number of customers, but he said the company grew annual sales 357 percent last year after the firm started selling its product in mid-2016. Claroty now has customers on six continents in nine verticals, including electric utilities, oil and gas, chemical, water and manufacturing.

Claorty's funding announcement comes as concerns mount over cyberattacks directed at critical infrastructure. A report from the Kosciuszko Institute earlier this year said the number of attacks on critical infrastructure will increase as threat vectors broaden to different kinds of facilities. In a May survey of 582 IT security professionals, 85 percent said they believe their country of origin will suffer a major attack on critical infrastructure in the next five years.

Jeff Murray, president of Control Point, a Scarborough, Maine-based operational technology solution provider, told CRN that some of his customers, which represent the manufacturing and municipality sectors, have held off from connecting their systems online due to security concerns.

"The OT space is really anxious about how they integrate with the Web," he said.

But beyond focusing on threat monitoring, Murray said he thinks it's also important for solution providers and industrial companies to design systems with security in mind from the start.

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