Recorded Future Bought for $780M in Latest Boston Cybersecurity Deal

Recorded Future is being acquired by tech investor Insight Partners in a $780 million all-cash deal, the cyber-threat intelligence company announced this morning.

Insight Partners, a New York-based venture capital and private equity firm, led a $25 million round of funding that Recorded Future raised in October 2017. At the time, the cash put the Somerville, MA-based startup’s total venture haul at $58 million. It was founded in 2009 and has raised funding from Google’s venture arm, GV, In-Q-Tel, Accomplice, IA Ventures, Balderton Capital, Reed Elsevier Ventures, MassMutual Ventures, and others.

Insight’s deal buys out those investors to land a controlling stake in Recorded Future, and it is also adding an undisclosed amount of cash into the company’s bank accounts as an additional investment. The only remaining shareholders other than Insight are insiders like Recorded Future CEO Christopher Ahlberg.

Recorded Future scans the internet—from the vanilla Main Street websites most people use all the way to the back alleys of the dark web—with machine learning software to collect and analyze intelligence on cyber threats that can be fed to security analysts and operations teams tasked with protecting a company or organization.

Ahlberg, who founded the company with Chief Technology Officer Staffan Truvé, says interest in cybersecurity threat intelligence from major corporations and government agencies has increased over the past year, a fact that’s made scheduling meetings with chief information security officers much easier. (For more, check out Xconomy’s 2017 interview with Ahlberg, where he describes using the “web as a giant sensor”.)

“We used to try to get in front of these CISOs to speak with them, and it would be a struggle,” Ahlberg tells Xconomy. “Now we can talk to any CISO at the top of the government agencies and the biggest banks and it’s not a problem.”

Ahlberg attributes the uptick in attention to chief security officers grasping for the best options they can find to get ahead of what’s become an increasingly higher-stakes task of securing organizations’ digital assets. Also, the concern over breaches has shifted from hacktivist adversaries like Anonymous to nation states that attempt to burglarize governments and corporations for sensitive intellectual property and cybercriminals seeking richer and richer loots, Ahlberg says.

“The numbers are getting gigantic,” he says, citing a 2016 cyber operation that set out to steal nearly a billion dollars from Bangladesh’s central bank.

Interest in threat intelligence hasn’t just been a boon for Recorded Future. A long list of companies are running competing security platforms promising the type of information that will level the playing field with cyber adversaries: ThreatConnect, IBM (NYSE: IBM), FireEye, Palo Alto Networks (NYSE: PANW), LookingGlass Cyber, and Palantir, to name a few.

The transaction came together little by little after Insight joined as an investor nearly two years ago, Ahlberg tells Xconomy. Then as interest in the cyber threat intelligence sector grew, so did Recorded Future’s list of potential suitors.

“We started to get all kinds of interest in the company from all kinds of parties,” Ahlberg says. “As we started talking to these parties, the guys at Insight said, ‘We’d like to own the company,’ and they set a number and a set of terms around it that we couldn’t not do it.”

The deal for Recorded Future is also another feather in the cap of the Boston cybersecurity scene that’s seen more than its fair share of recent big money deals: In November 2018, private equity firm Thoma Bravo bought Veracode for $950 million, just months after Veracode’s parent company CA Technologies was bought by Broadcom (NASDAQ: AVGO); in November 2017, Synopsys (NASDAQ: SNPS) snatched up Burlington, MA-based Black Duck Software for $565 million; and in June 2016, Cisco Systems bought Waltham, MA-based Cloudlock for $293 million.

Recorded Future has 384 employees in Massachusetts, Virginia, Sweden, and the UK, and is adding Mike Triplett and Thomas Krane from Insight Partners to its board of directors as part of the deal.

Brian Dowling is a Senior Editor at Xconomy, based in Boston. You can reach him at bdowling [at] xconomy.com. Follow @be_d

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