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Cylance, fighting malicious hackers with AI, hits $1B valuation after raising $100M

TechCrunch TechCrunch 9/06/2016 Ingrid Lunden

“If you can’t beat them, join them” may not sound like the most encouraging pitch for a cybersecurity company, but a startup called Cylance has created an artificial intelligence-powered brain that essentially does just that, and it has taken off — raising $100 million in a Series D round of funding and catapulting itself into the so-called ‘unicorn’ club of companies with $1 billion valuations.

The Series D round of funding was led by Blackstone Tactical Opportunities and Insight Venture Partners, along with existing investors (unnamed which but previous backers include strategics like Capital One, Dell Ventures, DFJ, Fairhaven, Khosla, KKR and Ten Eleven). It takes the total raised to over $177 million. Cylance is not disclosing its valuation but a reliable source close to the company says it’s in the neighborhood of $1 billion — a figure also reported by the FT.

Founded and led by Stuart McClure, a serial entrepreneur and former CTO of Intel’s McAfee, Cylance’s system is part of the rising wave of companies — including biggies like IBM’s Watson and Google’s Brain — that use machine learning and AI to build services that replicate or enhance human thinking to solve more complex problems that might be too challenging or cost prohibitive for a person (or even an army of people) to solve. While we’ve seen this applied in services like search engines, weather prediction and winning Chess games, in the case of Cylance, McClure says the company uses machine learning and AI “to think like a cyber hacker.”

By that, he means that Cylance’s system — specifically  its CylancePROTECT product — is predicting how malware, zero-day attacks, and other cyberthreats can attack networks, and then heading them off at the pass, “eliminating the need for individual security teams to analyze and develop expertise in defending against each new cyberattack.”

Cylance is not the only startup fighting security challenges with new big-data tools and clever algorithms. And in fact it seems to be something of a trend and belief that we have to go beyond blacklists and white lists, with machine learning inevitably going to be at the center of how we fight all these threats, which are by their nature also evolving with the use of machine learning and AI.

What sets Cylance apart is that it’s making a very big business of this already. The company is already working with over 1,000 companies and “millions of endpoints,” with clients including government agencies and large businesses, and says that its billings have grown over 1,000 percent since first being launched in 2012, and customer numbers 785 percent in that period, making it one of the fastest-growing among all security startups.

And the fact that some of Cylance’s clients are in Blackstone’s portfolio was one of the reasons why the PE and venture funding icon chose to invest in it, accord to Viral Patel, an MD of Blackstone’s Tactical Opportunities.

“We’re enthusiastic about supporting the terrific management team at Cylance, a company well-positioned for growth with a strong foundation in the cyber-security space,” he said in a statement. “Cylance’s strong track record, including at Blackstone portfolio companies, deepens our conviction in the value that this platform can offer across sectors.”

The growth, of course, is one of the details that caught the eye of investors. “We have been tracking Cylance since they came to market, and are thrilled to be partnering with them,” said Mike Triplett, Managing Director at Insight Venture Partners. “Cylance’s team and technology have delivered on exactly what they’ve promised: elegant and effective prevention at the endpoint, in addition to impressive customers and growth.”

Cylance tells me that this latest round will be used to ramp up its sales and marketing globally, with target customers running the gamut from “the largest financial institutions to the smallest dental office in Malaysia.”

“We want to protect every computer and endpoint under the sun with this revolutionary technology. And we won’t stop until we do,” a spokesperson said. In fact, right now Cylance is mainly working companies in the former of these two categories but will soon be launching more tools (and pricing) for SMBs, which was always the bigger ambition, said McClure.

“We founded Cylance almost four years ago with a singular mission: protect those who cannot protect themselves, and empower those who can,” he said in a statement. “Our goal of reinventing endpoint security by using machine learning to think like a cyber hacker has been achieved and we now must ensure that it is put in the hands of security leaders inside enterprises, organizations, governments and small businesses as quickly as possible.”

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