eSentire, the Cambridge-based cyber security firm, has received a major injection of funds from global private equity firm Warburg Pincus.

Terms of the deal, announced Monday, were not disclosed but the Financial Post reported that it “involved a ‘nine-digit’ cheque,” and added that “Fortune reported Monday that the investment totalled more than US$100 million.”

A source close to eSentire told Communitech News that the figures described in the Financial Post story are accurate.

“What’s going on here is we invented what is now one of the hottest categories in cyber security, called Managed Detection and Response,” said eSentire CEO J. Paul Haynes.

“They say it’s going to grow 15-fold in the next five years, to a $1.6-billion market. Based on that, we are about 20 per cent of market share. So if we’re going to protect [what is a] $320-million company, we’re going to need some financial partners that are going to go the distance. When this became evident to us, back in February, that was what everyone rallied around.

“They said, you guys are it. If you don’t go out and seize the opportunity, then shame on us.

“All of [our existing] investors, as great as they were, it was way beyond their ability to support. There’s a lot of capital required in a rapidly growing business.

“So we went to the market and we had a lot of inbound interest. I believe we got the right deal for us, with the right partners.”

Warburg Pincus is headquartered in New York and has more than US$44 billion in private equity assets under management and a portfolio of more than 140 companies. Its president is Timothy Geithner, former Secretary of the Treasury in the Obama administration.

eSentire is a rapid growth phase. The company last February reported revenue growth of 60 per cent year-over-year. Also last February, eSentire raised CAD$27 million in a round co-led by Edison Partners and Georgian Partners. The round included Cisco Investments, Northleaf Venture Catalyst Fund, and Information Venture Partners II. Cisco is expected to cash out in the wake of the deal with Warburg Pincus.

Haynes said eSentire now has 300 employees, 250 of whom are based in Cambridge.

“We are going to be hiring aggressively in the R&D area,” Haynes said. “We are also expanding fairly aggressively in the go-to-market.”

The partnership with Warburg Pincus is expected to last three to five years.

“With the ever-increasing complexity around cyber security and scarcity of security talent, more companies are seeking comprehensive managed services that proactively detect and respond to cyber threats in real time,” said Cary J. Davis, Managing Director, Warburg Pincus, in a release.

“eSentire provides the most complete suite of technologies and services in the MDR market and has experienced industry-leading growth and impressive customer satisfaction. We are excited to partner with management to support the company’s continued expansion and help them serve the complex cybersecurity needs of their customers.”

 

About The Author

Craig Daniels
Senior Journalist

Craig Daniels is a veteran reporter, columnist and editor who has joined Communitech’s editorial team as senior journalist. He worked most recently at Postmedia in Hamilton, where he led the team that produced the National Post, and before that at the Globe and Mail, the Toronto Sun, Financial Post, the Montreal Daily News and the Telegraph-Journal in Saint John, N.B. He has an abiding interest in the transformational power and promise of tech and startup ecosystems, is a commercially licensed pilot, and has a debilitating wrist-watch fetish.