Hanover, Maryland-based Dragos, a cybersecurity company that detects and responds to threats in industrial controls systems, announced today that it raised $200 million in series D funding at a $1.7 billion post-money valuation. Dragos claims this marks the largest funding round and the highest valuation achieved by an operational technology (OT) cybersecurity company. The company plans to leverage to expand globally and support customers in electric, oil and gas, chemical, pharmaceutical, food and beverage, water, and manufacturing industries.
“Executives around the world from corporate leadership to government officials have continued to note the criticality of protecting OT and the need to do so with OT specific approaches,” CEO and cofounder Robert M. Lee said in a statement. “The risks are not just in cyberattacks, though those are becoming more numerous and aggressive, but also in ensuring the appropriate insights into … environments to maintain resilience as our world’s infrastructures and industrial automation environments become more connected and more complex. The series D represents further validation of the importance of our mission but is only possible due to our customers and partners. Their tireless efforts to secure our infrastructure too often goes underappreciated.”
Securing infrastructure
OT handles the monitoring and control of physical devices, events, and work processes in industrial environments. OT systems are often programmed to control valves, engines, conveyors, and other machines to regulate various process values — e.g., temperature, pressure, and flow — and prevent hazardous conditions from occurring. OT systems use various technologies for hardware design and communications protocols, architectures, and standards that are uncommon in IT, supervising industrial workflows with (ideally) real-time processing, reliability, and availability.
Dragos was cofounded in 2016 by Jon Lavender, Justin Cavinee, and Lee, who had the goal of launching a sensor-based platform to provide customers visibility into industrial control systems (ICS) and OT networks so that threats could be identified — and addressed. Dragos analyzes data sources, including protocols, network traffic, logs, asset characterizations, and anomalies, gaining an understanding of equipment behavior and function codes as well as pinpointing malicious activity to offer context for alerts.
Dragos provides playbooks to guide security teams throughout active cyberattack investigations. Beyond this, the company hosts Neighborhood Keeper, an opt-in, anonymized network intended to share threat intelligence across different organizations. Dragos claims that the network is capable of detecting supply chain risks and equipment, vulnerabilities, and cyber threats that need to be identified and remediated, acting as a sort of “cyber broadcasting service” for participating companies and governments.
“A fully connected enterprise requires a comprehensive approach to industrial security,” Rachael Conrad, VP and general manager at Rockwell Automation, a participant in the funding, said in a statement. “This is not only a strategic investment for us, but a reflection of the commitment we’ve seen from the manufacturing community to take industrial cybersecurity more seriously. This activity will allow our customers, who are transforming their manufacturing and industrial operations through cloud and enterprise technologies, to have further protection of their operational environments and help them maximize the value of their digital transformation initiatives.”
Dragos claims that revenue grew 100% year-over-year as it grew operations in the U.K., Australia, New Zealand, and within the Gulf Cooperation Council (which includes Saudi Arabia and the United Arab Emirates). The company plans to open an office in Dubai in the coming months as it expands its workforce.
In addition to Rockwell, Koch Disruptive Technologies contributed to — and led — Dragos’ series D round, which brings the company’s total raised to over $364 million. Emerson, Hewlett Packard Enterprise, Allegis Cyber, Canaan, DataTribe, Energy Impact Partners, Schweitzer Engineering Labs, and National Grid also participated.
Growing threats
Cyberattacks on organizations and infrastructure are at an all-time high. In May, JBS, a Brazilian meat processor that serves as America’s largest source for beef and pork, discovered that hackers successfully compromised its internal networks. Another recent incident, also in May of this year, attackers managed to gain access inside the network of the oil and gas company Colonial Pipeline, temporarily halting the pipeline’s operations and spurring a short-lived energy crisis throughout the Southeast.
According to one source, in 2017, ransomware and internet of things (IoT) attacks were up 350% and 600% year-over-year, respectively. Ransomware costs were expected to surpass $11.5 billion as far back as 2019. The situation worsened with the arrival of the pandemic, with the year 2020 breaking all records when it came to the sheer numbers of cyberattacks on companies, government, and individuals.
Dragos competes with Nozomi Networks, which raised $100 million in August for its cybersecurity and operational visibility services for industrial control systems. Others in the industrial security space — which is estimated to be worth over $22.3 billion — include CyberX and NexDefense.
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