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Palo Alto Networks In Talks To Buy Cybersecurity Startup Demisto: Report

Demisto announced in October that it had closed a $43 million Series C round led by Greylock Partners, bringing the rising cybersecurity star’s total equity funding to $69 million.

Palo Alto Networks is in talks to acquire fast-growing cybersecurity startup Demisto, according to a report Monday from Israeli business publication Calcalist.

The Cupertino, Calif.-based rising star was founded in 2015 and develops and markets automation tools for cybersecurity management, including a chatbot that assists security analysts in handling tasks. Demisto announced in October that it had closed a $43 million Series C round led by Greylock Partners, bringing the company's total equity funding to $69 million.

Palo Alto Networks said it doesn't comment on rumors and speculation and Demisto declined to comment. Demisto Co-Founder Dan Sarel also declined to comment on the report to Calcalist, but told the publication that the company is now experiencing significant growth in both sales and number of employees.

[Related: Palo Alto Networks To Buy Cloud Security Startup RedLock For $173 Million]

Other Demisto backers include Accel Partners, ClearSky Security, Slack Technologies, Wipro Ventures, Secure Octane, and Cerca Partners. Following the Series C funding, Demisto had a valuation of $175 million, according to Pitchbook. The company employs approximately 163 people, according to LinkedIn.

Demisto introduced the two-tiered Nucleus Partner Program in June 2017, which provides partners with deal registration provisions, incumbency on expansionary and renewal sales, first right of refusal on professional services, pre- and post-sales training, and high-margin pricing for partners. The program was being led by Bob Kruse, who joined from Optiv in April 2017 as vice president of alliances.

The company said it was looking to add managed security service providers, system integrators, technology partners, and consulting partners. Demisto was already working 100 percent with the channel prior to the launch of its partner program and does not sell direct.

Demisto was founded by four former executives at McAfee, three of whom joined the platform security giant through its 2011 purchase of Israeli database security vendor Sentrigo. Customers of Demisto include Kansas City and geographic information company ESRI.

Palo Alto Networks has infused its C-suite with new talent over the past year, bringing in former SoftBank and Google executive Nikesh Arora as CEO in June and ex-Google executive Amit Singh as president in October. The company reported total sales of $656 million in its fiscal first quarter of 2019, which ended Oct. 31, 2018.

The company has made three acquisitions over the past year, kicking things off in March with the $300 million purchase of Evident.io to make it easier for enterprise cloud users to keep their deployments compliant and secure. A month later, Palo Alto Networks bolstered its data collection and visualization capabilities on the endpoint through its purchase of emerging vendor Secdo for a reported $100 million.

Then in October, Palo Alto Networks agreed to purchase cloud security startup RedLock for $173 million to help security teams replacing manual investigations with automated, real-time remediation. The firm plans to create a single offering from the technologies of RedLock and Evident that delivers cloud security analytics, advanced threat detection, and continuous security and compliance monitoring.

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