Source Defense Raises $27M, Aims To Beef Up Channel Relationships

‘I’m a true believer in the channel. We need to build. We need to grow. The channel is key to that,’ says Dan Dinnar, CEO of Source Defense, which describes itself as a ‘pioneer in web application client-side protection.’

Source Defense has secured another $27 million in funding as it seeks to expand sales of its security product designed to thwart cyberattacks occurring via supply chain partners’ access to corporate websites.

The latest funding, led by new investor Springtide Ventures, brings Source Defense’s total funding since 2016 to more than $40 million.

In the past, Source Defense, whose U.S. headquarters are based in New Haven, Conn., has spent its venture funding mostly on R&D.

[RELATED: WndrCo’s Portfolio Firms Eye More Sales Via The Channel]

But Dan Dinnar, CEO of Source Defense, told CRN that the company will spend more of its newly raised cash this time on sales, marketing, alliances and talent development, as well as on R&D.

Source Defense also is looking to beef up its relationships with regional channel players, particularly local resellers, as it attempts to increase its sales to larger corporations, many of them Fortune 500 companies in finance, health care, retail, transportation and other sectors.

Dinnar declined to reveal the private company’s revenue or what percentage of its sales comes via the channel. But he said a “very high percentage” of Source Defense’s business today is driven by the channel and he wants to expand that business.

“I’m a true believer in the channel,” Dinnar said. “We need to build. We need to grow. The channel is key to that.”

Dinnar said Source Defense, which describes itself as a “pioneer in web application client-side protection,” expects to grow from 54 employees to about 80 employees by the end of this year, while maintaining its rapid revenue growth of late.

In a release, the company said it has “posted in excess of 250 percent growth in the past two years.”

Source Defense believes it has developed a much-needed security product addressing third-party supply chain risks. Basically, many supply chain partners have access to large companies’ websites in order to make transactions. But through client-side JavaScript, those partners can act as “potential attack pathways” for hackers, said Dinnar.

Supply chain partners’ access to corporate websites is the “soft underbelly” of a company’s protection against cyberattacks—and those partners often bring infected code into large companies’ servers.

“That’s where the chaos begins,” said Dinnar of third-party vulnerabilities. “There’s a serious problem today with website security.”

Source Defense said the vulnerability has already resulted in hundreds of high-profile attacks and more than 400 client-side incidents per month in the past two years.

Major brands recently hit by such attacks include, among others, Macy’s, Ticketmaster, British Airways and Segway, according to Source Defense.

Steve Stumpfl, executive vice president of sales at Tevora, a cybersecurity consulting firm based in Irvine, Calif., said supply chain web risks are a growing problem for large corporations that do a lot of transactions via their websites.

“As they say, you’re only as secure as your clients’ security,” said Stumpfl, whose company has been a Source Defense partner for a number of years. “For constant and consistent monitoring of [web] threats, Source Defense has a good product. We have a number of clients who rely on it and are happy.”

In addition to Springtide Ventures, Source Defense’s previous investors participated in the latest $27 million funding round, including Jerusalem Venture Partners, AllegisCyber Capital, Connecticut Innovations, NightDragon and Capital One Ventures.

Karel Tusek, CTO of Springtide Ventures, will join the Source Defense board of directors.

“For an investor, you don’t just want to invest in innovations that make security better, you want to find innovations that have a positive, material impact on business,” said Tusek in a statement. “Source Defense has solved a massive problem.”