OmniTrust Secures $6M

Last week, as Internet users all over the world reeled from the latest computer virus, a Silicon Valley company continued to court investors with the promise of delivering content security.

OmniTrust Security Systems closed on $6 million for what it hopes will be a $9 million Series B round.

Japanese research firm and new strategic investor Nomura Research Institute (NRI) joined previous investors Diamond Capital Co., Global Catalyst Partners, Lucent Venture Capital and Mistui Sumitomo Insurance Venture Capital.

NRI has added an observer to the company’s board of directors. OmniTrust, formerly known as Probix, is currently in discussions with several venture capital firms to secure another $3 million. It hopes to have a final close on the Series B financing before the middle of the year.

The round had a post-money valuation of $15.5 million, which may change depending on new investors entering the round. The Mountain View, Calif.-based company’s $14 million Series A round closed in 2000 with a post-money valuation of $29 million. To date OmniTrust has raised more than $20 million.

Michael Mansouri, president and CEO of OmniTrust, says that the Series B funding will carry the company through to profitability by the middle of 2005. Mansouri, the former CEO of iPass Inc., says that in addition to normal security concerns, increases in federal regulations will push more corporations to invest in IT security services.

Investors are not scared by the prospect of a bubble in the IT security market. “Security is a very fragmented market overall,” says Mary Coleman, a managing director with Walden International and an OmniTrust board member. “There are a lot of hackers out there that keep doing new things. There are always new opportunities.”

She adds that while the space may get crowded with new companies, there will be an increased number of M&A opportunities as larger, more established companies seek to expand their reach through acquisitions.

OmniTrust plans to use most of its funding to expand in North America and Asia. Mansouri says that his company’s staff of 28 could double by this time next year.

The company plans to intensify its marketing to gain new customers. OmniTrust acquired more than 30 new customers within the past year. The company’s expansion will center on acquiring regional resellers to distribute its products. Investor NRI, a consulting and system integration firm, provides OmniTrust’s services in Japan.