Industrial cybersecurity startup Dragos has closed a Series C funding round to support customers across a broader range of industries and accelerate global operations.
The Hanover, Md.-based company said its $110 million round was co-led by National Grid Partners and Koch Disruptive Technologies, and represents the largest-ever investment in a company in the industrial controls systems (ICS) or operational technology (OT) cybersecurity spaces. Dragos will use the proceeds to serve clients in the electric, oil and gas, manufacturing, mining, chemicals and transportation spaces.
“It’s a powerful story to raise a large round,” Dragos Co-Founder and CEO Robert Lee told CRN. “The OT security market is very large, worth doing and sustainable.”
Dragos was founded in 2016, employs 220 people, and has now raised $158.2 million in five rounds of outside funding, according to LinkedIn and Crunchbase. The company closed a $37 million Series B funding round led by Canaan Partners in November 2018.
The company plans to use some of the proceeds to build out regional centers in Melbourne, Dubai and the United Kingdom to help grow its share of international business from 25 percent to 30 percent today to between 40 percent and 50 percent a year or two from now, Lee said. Australia and the U.K. have a deep understanding of the importance of protecting infrastructure and a desire to make investments.
Meanwhile, Lee said the Gulf Cooperation Council (GCC) nations served out of Dubai face powerful and motivated adversaries who aren’t afraid of killing people in cyberattacks such as the August 2017 hack of a petrochemical plant in Saudi Arabia that was meant to trigger an explosion.
From a vertical perspective, Dragos would like to do more in the rail and mining spaces, which Lee said often fly under the radar due to the size of the manufacturing market. The rail and mining spaces have lots of safety equipment that could potentially be exposed, which Dragos considers vital to its mission.
“You can’t only sell to the big players in the biggest markets,” Lee said. “You need to partner with the companies that need help too.”
Dragos’ fastest-growing verticals since the start of COVID-19 have been electric, manufacturing and oil and gas, Lee said. The electric companies realize that Dragos’ capabilities are vital from a national security perspective, Lee said, while manufacturers have been laser-focused on safeguarding their plants and supply chain since the shift to remote work demonstrated just how interconnected the plants are.
And Lee said oil and gas suppliers understand the vital link between plant safety and industrial control systems (ICS) security even as these companies face extraordinary challenges due to the reduction in travel during COVID-19.
From a go-to-market perspective, Lee said Dragos has been building out a 30-person customer success team that can cultivate multi-decade relationships with clients. This team is intended to go beyond providing implementation advice and give clients access to ICS subject matter experts who can assist with everything from developing training programs to helping the CEO brief the board on cybersecurity.
Between 15 percent and 20 percent of Dragos’ sales go through the channel today, and the company works closely with Deloitte, PwC and Emerson, according to Lee. The companies wants to grow the share of business flowing through the channel to between 30 percent and 40 percent by bringing on more VARs and systems integrators who are extremely trusted by their customers in the coming years.
From a metrics standpoint, Lee hopes the Series C funding will help Dragos maintain high customer success scores, add new logos across a range of verticals and geographies, and continue to aggressively grow annual recurring revenue.
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