Industrial Cybersecurity Firm Nozomi Networks Raises $30M To Scale

Nozomi Networks has completed its second funding round in 2018 alone to boost the company's capacity to address security issues faced by operational networks.

The San Francisco, Calif.-based industrial cybersecurity startup plans to use the $30 million in Series C proceeds to double its headcount for just under 60 employees today to roughly 120 workers within the next two years, said Nozomi Networks CEO Edgard Capdevielle. The money will be used to boost Nozomi's capacity in everything from sales and marketing to technical operations and engineering.

"Customers that know Nozomi pick Nozomi," Capdevielle told CRN. "Success is ahead of us."

[Related: The 10 Top Cybersecurity Startups Of 2018 (So Far)]

The market opportunity around protecting industrial control networks is extremely large, Capdevielle said, but the industry is only now starting to wake up. As a result, Capdevielle said he wants to invest heavily in marketing to ensure Nozomi is on the shortlist of vendors being considered by mining companies, refineries and electric utilities alike regardless of geography.

Once prospective customers have determined that Nozomi is one of the top tools for them to test and consider, Nozomi said he wants the company's direct and channel sales teams to engage and prove that Nozomi is best for them. Roughly half of Nozomi's sales flow through channel partners today, and Capdevielle would like to have the channel driving 90 percent of sales within the next 18 to 36 months.

Given that the industrial cybersecurity market is still in an early stage, Capdevielle said the conversations tend to be very technical, requiring both sales and technical operations resources. And from an engineering standpoint, Nozomi needs to be able to customize the product to address specific customer needs and have the ability to introduce capabilities that address new or emerging threats within days.

As a small startup, Capdevielle said Nozomi was transacting nearly everything direct to remain as close to the customer as possible. But given the rapid growth and maturation of the market over the past year, Capdevielle said Nozomi is now entering a phase where the channel becomes very important.

Over the past three months, Capdevielle said Nozomi has added distributors across the globe to boost Nozomi's scale and awareness and provide logistical expertise. There is a significant on-premise component associated with securing on-premise networks, and Capdevielle expects distributors to provide assistance with shipping equipment to solution providers in places such as Poland and Brazil.

Incorporating a distribution layer will also enable Nozomi to rapidly scale its base of channel partners since the distributors have the right to supply the product to their own base of resellers. Prior to adding distribution, Capdevielle said Nozomi was working with roughly 20 solution providers in Europe, as well as a handful in North America and South America.

Nozomi is most interested in channel partners that have experience working with industrial customers in areas such as mining, manufacturing, transportation, refining oil, or generating hydro, solar or wind power, Capdevielle said. And from a technical standpoint, Capdevielle wants partners to have network security expertise and familiarity with technologies such as firewalls and packet inspection.

As Nozomi further leverages its global distribution network, Capdevielle said partners can expect additional training, marketing funds, and joint outbound activity.

The $30 million Series C round was led by Giovanni Canetta Roeder, and included money from Planven Investments SA, GGV Capital, Lux Capital, Energize Ventures, and THI Investments. The funds came just nine months after Nozomi closed a $15 million Series B led by Energize Ventures.

All told, Nozomi has raised $53.8 million in four funding rounds since its October 2013 founding. And from a headcount perspective, Capdevielle said Nozomi's staff has grown from just seven people two years ago to 25 workers last year to nearly 60 employees today.