Claroty raises $400M to protect ‘cyber-physical’ systems such as IoT and industrial

Claroty, which offers a security platform for “cyber-physical” systems including IoT and industrial IoT, today disclosed a $400 million series E funding round along with the acquisition of healthcare IoT security startup Medigate.

An emerging technology category, cyber physical systems security recognizes that cyber threats and vulnerabilities now extend beyond IT infrastructure alone, and can impact the increasingly IT- and IoT-connected physical infrastructure, as well. Gartner has forecast that cyber physical systems attacks will result in more than $50 billion in financial impact by 2023—and by 2025, will have resulted in human casualties.

IT-OT convergence

With the increasing convergence of IT, operational technology (OT), and other physical systems, new security approaches and solutions are required, according to Gartner.

Cyber physical systems security offers a set of capabilities to enable organizations to securely manage their increasingly interconnected environments — particularly in terms of bringing better visibility of assets and systems.

Founded in 2014, Claroty says it offers security for cyber-physical systems spanning industrial/OT, enterprise/IoT, and healthcare environments.

The New York-based company said in a news release that it offers a “unified” platform that integrates with the current infrastructure used by customers, in order to provide a “full range of controls for visibility, risk and vulnerability management, threat detection, and secure remote access.”

Claroty’s platform offers a continuous threat detection solution with benefits such as full visibility of assets across OT, IoT, and industrial IoT; automatic segmentation of industrial networks; risk and vulnerability management; and rapid detection of potential threats, according to the company’s website.

Meanwhile, the company also offers a solution for secure remote access to OT environments with benefits including simplified connectivity, reduced cost, and full visibility and control over all remote connections, the website says.

In addition, Claroty’s platform integrates with security tools including firewalls; network access control solutions; security information and event management (SIEM) tools; and security orchestration, automation, and response (SOAR) solutions.

Major funding

The series E round brings Claroty to a total of $635 million worth of funding raised to date.

New investor SoftBank, though its SoftBank Vision Fund 2, co-led the round for Claroty. Bessemer Venture Partners and Schneider Electric also co-led the funding with SoftBank. Other investors in the round included ISTARI, Team8, and Standard Investments.

In its news release, Claroty said it is now the “most well-funded cybersecurity company in the industrial, healthcare, and enterprise IoT sectors.”

Another company in the space, Armis, last month raised $300 million at a post-money valuation of $3.4 billion, bringing it to a total of $600 million in funding.

Claroty did not disclose its valuation in connection with the series E round. By press time, the company had not answered a list of questions from VentureBeat, including about the company’s customer base, revenue growth, and plans for product development.

Healthcare IoT acquisition

Claroty said a portion of the series E round will go toward the acquisition of Medigate, but the terms of the deal were not disclosed.

The Brooklyn, N.Y.-based startup was founded in 2017, and had raised at least $50 million in funding from backers including YL Ventures and U.S. Venture Partners.

With the acquisition of Medigate, Claroty said it will gain “deep domain expertise and specialized technologies” around enabling the secure connection of clinical assets to a network.

The Medigate product offers “comprehensive” asset discovery and profiling, identification of vulnerabilities, risk assessment, and protections such as network policy enforcement, according to the company’s website.