Dragos secures $110M in Series C funding, as OT cybersecurity gathers momentum

Dragos OT cybersecurity

Cybersecurity company Dragos has secured US$110 million in Series C funding from investors to take the company’s total funding to $158 million, it announced on Tuesday. The company provides cybersecurity for industrial controls systems (ICS)/ OT environments.

The new investment is driven by a coalition of industrial and manufacturing companies, and investors, who aim to reap the benefits of improved operational OT cybersecurity technology in their daily operations, Dragos said in a blog post. Users are waking up to the cybersecurity realities wrought by digital transformation and are seeking the means to improve their risk management capability for future innovation.

Dragos is using the new funds to support an expanding set of global customers across a diversity of industries, including electric, oil and gas, manufacturing, mining, chemicals, and transportation, according to the company in Hanover, Maryland. It will also advance the next stage of Dragos’ global operations to address the burgeoning market for ICS/OT cybersecurity solutions.

This round of investment was co-led by National Grid Partners, the independent investment and innovation arm of National Grid, Saudi Aramco Energy Ventures (SAEV), a fund of Aramco Ventures, as well as Koch Disruptive Technologies, the investment arm of Koch Industries, Dragos said in a press statement.

Dragos also found favor with HPE Pathfinder, the investment arm of Hewlett Packard Enterprise (HPE), and existing investors including Allegis Cyber, Canaan, DataTribe, Energy Impact Partners, and Schweitzer Engineering Labs. HPE has an interest in Dragos both as a partnering IT security vendor and as a major manufacturer that must secure its own OT infrastructure.

National Grid Partners director Andre Turenne and Byron Knight, managing director of Koch Disruptive Technologies, have joined the Dragos board after the funding round, Dragos said.

Dragos was set up by Robert M. Lee, Jon Lavender and Justin Cavinee with a mission of identifying and responding to threats with the ICS worldwide. “So we built Dragos focused on our visibility, monitoring, and response technology but also with a professional services team of ICS cybersecurity experts to do everything from threat hunting and pentesting to incident response and architecture reviews while being trusted advisors to our customers,” Lee wrote in a LinkedIn post.

The Series C funding will also enable Dragos to continue to meet the cybersecurity needs of critical infrastructure at all levels, irrespective of the size or complexity of the organization. The effort to make ICS/OT-specific cybersecurity expertise and technology more accessible is a key element of the company’s mission, and will be aided by expanding its support for ICS/OT practitioner-oriented events, education and community networking opportunities.

The COVID-19 pandemic accelerated plans for digital transformation, with 80 percent of CEOs reporting to KPMG that the pandemic sped up their timetables. Building resilient, flexible supply chains that can withstand shocks and offer the agility to pivot to new opportunities will be critical for organizations as they drive growth and build a competitive advantage post-COVID, KPMG said. While the convergence of IT and OT network assets may have happened a long time ago, it is the business importance of that hyperconnectivity that is now blowing up.

Forrester Research reports that the increasingly complex and interconnected nature of ICS through command network and systems devices designed to monitor and control industrial processes combined with hackers’ interest in compromising them for political and economic purposes, has made these systems more vulnerable than ever.

Dragos’ funding comes at a time when the ICS/OT cybersecurity market is expected to hit $22.2 billion by 2025 led by an increasing number of sophisticated cyber-attacks on ICS systems and growing need for compliance with various upcoming regulations, according to MarketsandMarkets research.

Last month, Dragos released data that showed a surge in security threats targeting ICS and other ransomware, which can disrupt industrial and manufacturing processes, leading even to Internet exposed assets, intellectual property theft and industrial espionage. It publicly tracks five ICS-focused threats or activity groups that target manufacturing entities, and also traces other ransomware activities that are capable of disrupting operations by impacting resources such as logistics, fleet management and sales operations.

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