Riptech Tears Into $21M VC Round

While the Sept. 11 attacks destroyed lives and buildings, it also created a heightened concern about security, not only for the protection of human lives, but also to prevent precious and confidential data from falling into the wrong hands.

With security issues thrust into the spotlight in the wake of the attacks, many research firms, including Gartner Group and Forrester Research, have forecasted that the computer-related security industry could grow as much as 50% in the next year.

Perhaps those predictions were part of what prompted the venture capital community to pump $21 million worth of fresh capital into the coffers of managed security service provider Riptech.

The company, which boasts real-time remote managed security services, including monitoring and management of firewalls, intrusion detection systems and virtual private networks, already has more than 100 clients, including large pharmaceutical, energy and financial services companies.

“Security is not just a check-list item anymore, but a strategic item. Large and small firms are wrestling with how keep their companies secure and protected,” said Elad Yoran, executive vice president of corporate development and chief marketing officer with Riptech. “Many companies try to secure themselves internally, while others turn to Riptech.”

The benefit of having outside security like the type Riptech offers is simple, as it allows companies to focus their resources and time on their core businesses, he added.

Security Is King

Broadview Capital Partners, which led the deal with an $18 million infusion, believes the events of Sept. 11 will further fuel Riptech’s growth.

“What happened at the World Trade Center will have a positive impact on this type of business. There is clearly a heightened need for security and it will drive this market,” said Stephen Bachmann, a managing director with Broadview and Riptech’s newest board member.

In addition to Broadview, the participating investors included existing backers Columbia Capital, Providence Equity Partners Inc. and Comerica Bank.

Alexandria, Va.-based Riptech intends to use its newfound funds primarily to continue its research and development efforts, and add enhanced features and product support to its technology platform. The capital also will be dedicated to sales and marketing initiatives, and possibly strategic acquisitions and expanding Riptech’s customer support infrastructure.

The company, which has more than 150 employees, said it is seeing revenue well into the millions and expects to be profitable by the middle of next year. To get there, Yoran stressed, Riptech will have to be a bit spendthrift, but he does not foresee a need to revisit the private equity market in the future.

Danielle Fugazy can be contacted