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Dragos is a company we partnered with back in 2018 to lead their Series B. Since that initial investment, not only has the team’s expertise and technology delivered on our expectations, but their innovation in industrial cybersecurity has become ever more essential to the global economy.
With lots of cybersecurity startups today focused on protecting company and customer data often located in the cloud (including protecting remote workers now connecting to work applications, data, and networks), major industrial control systems – electrical grids, oil refineries, railways and airlines – have long remained vulnerable to hackers. With all of those industries now in some way coming online in the past few years (hello, Internet of Things (IoT) and its cousin, the Industrial Internet of Things (IIoT)), securing critical infrastructure has never been more important...or more difficult.
That shift is a big reason why we are excited to continue our partnership with Dragos as they announce $110 million in Series C today. This round is the most substantial investment-to-date for a company in the ICS/OT cybersecurity sector and a clear testament to Dragos’s tremendous progress, domain-specific expertise and industry leadership.
As I wrote at the time of our original investment, cybersecurity of Industrial Control Systems (ICS) and operational technology (OT) has long been overlooked due to arcane protocols and massive machinery. Our thesis in 2018 was that ICS/OT would emerge as a major category, with Dragos as an early pioneer.
Fast forward only two years. Now we’re seeing record funding in ICS/OT cybersecurity, with the market expected to hit $22.2 billion by 2025, with Dragos emerging as the clear leader, rooted largely in the company’s ICS/OT-specific domain expertise not available from traditional cybersecurity vendors.
Unlike most other areas in cybersecurity, an attack on the industrial backbone not only has severe financial ramifications, but can result in the loss of lives, giving security in this area particular strategic importance. The introduction of new technologies across industrial processes has spurred significant market demand for platforms like Dragos, namely the increase in intensity and variety of ICS-specific cyberthreats that has elevated risk across industries.
It’s been rewarding to work with this work with CEO Rob Lee and his team over the past two years and see them meet this moment for customers – and to start to build a community within industrial security through its Neighborhood Keeper program that makes analytics data accessible to smaller providers and the ICS community at large.
It’s clear that every company is now seeking a solution to this ever-changing constellation of threats. It’s why Dragos counts the world’s largest corporations in energy, oil & gas, manufacturing as customers – and some of them now as investors. It’s a testament to this company’s value that we see two of these customers – National Grid Partners and Koch Disruptive Technologies – leading this funding round, as well as new investors Hewlett Packard Enterprises and Saudi Aramco joining existing investors like Canaan to propel Dragos’ continued expansion.
As long as companies look to mitigate the risk of operational disruption and protect critical industrial infrastructure from cyber attacks, the burgeoning market for ICS/OT cybersecurity solutions will continue to grow. If that’s the case, and we believe it to be, the sky's the limit for Dragos.