Social networks present a growing security risk

Venture-backed activity around security companies appears to have dropped slightly in the last year, although researchers and venture capitalists both say that security technology is not keeping up with new threats.

Ray Rothrock, partner of Venrock, said that the most pressing security problem isn’t even being addressed, which he said is the amount of personal data people are exposing on social networks.

“We need a book like ‘Fast Food Nation’ to expose security issues,” he said in reference to Eric Schlosser’s expose on the food industry.

Similarly, Phillip Porras, a cyber security researcher at Menlo Park, Calif.-based SRI International, said websites are under heavy attack by malware developers. He said that he fears the problem will get worse as social networks and Internet-tethered devices, such as smart phones, become more popular.

“Social networks are overlay networks on top of the Internet,” he said at the RSA Conference last week in San Francisco. “The old technology like firewalls is there to protect the hosts, but I don’t know what the technology looks like” to protect social networks from malicious code.

“This is a hot area for research,” he added.

Rothrock was a judge last week at the RSA Conference, which is one of the year’s largest security conferences, where 10 security-related startups were chosen to demonstrate their products and present their companies in exchange for advice from a panel of executives and venture capitalists. In addition to Rothrock, the other VC judging companies was Asheem Chandna, partner of Greylock Partners.

The winning company, Altor Networks, claims to have built the world’s first virtual firewall to secure virtual machines. Its founders came from Checkpoint Software Technologies, which built one of the first physical Internet firewalls in the early 1990s.

Altor also last week announced it raised a $10 million Series B round from DAG Ventures and Juniper Networks, with participation from previous investors Accel Partners and Foundation Capital.

The key to Altor’s technology, according to CEO Amir Ben-Efraim, is its integration into VMware’s virtual machine, which improves its ability to monitor virtual threats.

“Securing virtual machines is harder than physical machines, and adoption of virtualization is being curtailed because of these concerns,” Ben-Efraim said.

Three of the other presenting startups at the RSA include HyTrust, which helps companies that are using virtualization monitor their IT controls for regulators; Navajo Systems, which encrypts data in the cloud; and Silver Tail Systems, which detects fraudulent behavior on websites.

Still, the number of startups applying to present at RSA was down this year by about 25%, according to conference spokesman Alex Kirschner, who declined to speculate on the reason.

Meanwhile, spending on security by corporate chief information officers is expected to be flat this year, according to a survey this month by Citi Investment Research, despite an uptick in IT budgets of 2 percent. —Deborah Gage