Abnormal Security Secures $250 Million for AI Cybersecurity Growth

A startup led by a former Twitter executive has raised $250 million to expand its global presence and improve its messaging security and account takeover prevention offerings.

See also: Measuring the risk associated with your data

The San Francisco-based human behavior security vendor said the Series D funding will allow Abnormal to expand into non-English speaking markets, enter the U.S. federal sector and explore building data loss prevention and insider threat offerings, Chairman Mike DeCesare said. The funding round led by Wellington Management values ​​Abnormal at $5.1 billion and comes after it reached $200 million in annual recurring revenue.

“This comfortably gives us the capitalization we need in the company to make it a long-term generational company,” DeCesare told Information Security Media Group.

The latest funding comes 27 months after Abnormal Security closed a $210 million Series C round at a $4 million valuation, meaning Abnormal has grown its market cap by 27.5% despite the economic downturn. The company, founded in 2018, employs 747 people and is led by Evan Reiser, who previously led product management and machine learning for Twitter’s advertising business (see: Abnormal Security Raises $210M to Go Beyond Email Defense).

Expansion beyond English-speaking countries

DeCesare praised Wellington Management for its shared vision, its future investment in AI and its potential to help Abnormal in its eventual transition to a publicly traded company. While Abnormal has strong financials and is operating efficiently, the company needs to expand its product portfolio and market presence, particularly in non-English speaking regions, to be ready for an IPO, DeCesare said.

“Having a cornerstone like Wellington on your cap table and helping us navigate those waters and also be consistent throughout this transition (to a public company) is extremely positive,” DeCesare said, noting that Abnormal has doubled its annual recurring revenue over the past year.

Abnormal is looking to expand its reach beyond English-speaking countries by localizing its products for various markets, including Japan, Germany and France, DeCesare said. The expansion is driven by a desire to capture additional market share and support multinational customers with global operations who expect local support in every region they operate in, according to DeCesare.

Additionally, DeCesare said Abnormal is making significant investments to enter the federal market, including technical support and professional services tailored to the needs of the U.S. government. The need to obtain FedRAMP certification to serve federal agencies has created a major opening for Abnormal’s email security capabilities, according to DeCesare.

From a product perspective, DeCesare said Abnormal aims to bolster its email security suite with additional products such as AI Security Mailbox Protection and Account Takeover, and address new types of threats emerging from cloud applications. The company is seeing strong adoption of its email account takeover offering and plans to focus on cross-selling ancillary tools to its core email security customers (see: From Email to Human Behavior: The Evolution of Abnormal Security).

“There’s a complete expansion opportunity for us, just within the email stack,” DeCesare said. “For every customer we’ve sold to, we’re actively trying to sell them other email products that make the email security experience even stronger. Then, outside of that, there’s a whole other set of products, which really starts with account takeover.”

What makes DLP and insider threat prevention attractive?

DeCesare said Abnormal is exploring areas such as data loss prevention and insider threat prevention tools as potential areas for future expansion, as those markets align with customer demand and Abnormal’s behavioral analytics capabilities. Abnormal’s core human behavior technology is well positioned to differentiate the company in insider threats, while competitors such as Proofpoint and Mimecast play in the DLP space.

“DLP is a no-brainer because it’s the most important piece that traditional email security gateway vendors offer that Abnormal doesn’t have,” DeCesare said. “So it would be a logical step for us.”

According to DeCesare, Abnormal has a high win rate against companies like Proofpoint and Mimecast because of its proof-of-value engagements that show the company detects threats that traditional secure email gateways don’t. He said the company leverages AI to improve its products, ensuring it can autonomously respond and neutralize threats in real time (see: Abnormal Hitch at Exabeam, Forescout CEO Mike DeCesare as Prez).

Key metrics for Abnormal include maintaining high revenue growth, achieving positive free cash flow and ensuring high customer retention rates, which DeCesare said are critical to a successful IPO.

“We’ve been able to, even at scale, maintain an above-average growth rate,” DeCesare said. “I mean, $200 million in annual recurring revenue and 100% year-over-year growth is obviously pretty strong at that level of scale.”