Claroty announced the next step forward in its mission to secure all cyber-physical systems (CPS) across industrial, healthcare, and enterprise environments – the Extended Internet of Things (XIoT) – by raising $400 million in Series E funding and entering an agreement to acquire Medigate.
The round brings the company’s total funding to $635 million, making it the most well-funded cybersecurity company in the industrial (OT), healthcare (IoMT), and enterprise IoT sectors.
“While connectivity between the cyber and physical systems in manufacturing, healthcare, energy, and other industries is driving significant competitive advantages via increased operational agility and resilience, it also creates greater exposure to risks with serious consequences for patient safety, public safety, and the environment,” said Yaniv Vardi, CEO of Claroty. “By combining Claroty and Medigate’s deep domain expertise and specialized technologies into a single platform, we will take a giant leap forward on our mission to secure the ever-expanding universe of XIoT for every connected organization. We envision a future where cyber and physical worlds safely connect to support our lives, and with such strong backing from some of the world’s foremost technology investors, we have the resources we need to make this vision a reality.”
$400 million series E
The Series E funding was co-led by new investor SoftBank Vision Fund 2, as well as existing investors Bessemer Venture Partners and Schneider Electric. Other existing investors, including ISTARI (a global cybersecurity platform established by Temasek), Team8, and Standard Investments, participated as well. Additionally, Yossi Cohen, head of SoftBank’s investment activities in Israel, will join Claroty’s board of directors.
“As digital transformation initiatives drive the essential physical systems that we rely on for even the most basic human needs, securing these systems is ultimately about mitigating risks to human life,” said Yossi Cohen of SoftBank Investment Advisers. “Claroty’s technology addresses a high-stakes problem in enabling safe digital transformation, and we are eager to partner with the team in its journey to protect the critical infrastructure that is the foundation of the AI revolution.”
“The real threat to society is not the Skynet AI, but human hackers turning our machines against us. We see this happening in hospitals, factories, electric and water utilities, transportation, building controls, and oil rigs,” said Bessemer partner and Claroty board member David Cowan. “Bessemer helped get Claroty started in 2016 to restore trust in the world’s physical plant – the new frontier for cyber defense; and now we believe the company’s recognition by Forrester as a Leader in industrial control systems (ICS) security confirms our conviction in its capabilities, traction, and leadership.”
Securing the XIoT
According to Gartner, “Over time, the technologies that underpin critical infrastructure have become more digitized and connected — either to enterprise IT systems and/or to each other — creating cyber-physical systems. CPS are composed of both legacy infrastructure (deployed years ago without built-in security) and new assets, which are also deployed full of vulnerabilities. The result has been a substantial increase in the attack surface for hackers and bad actors of all kinds, and the CPS that underpin most of this critical infrastructure are under increasing attack.”
Securing CPS is a particularly acute challenge in the healthcare sector due to the proliferation of IoT and IoMT devices connecting to hospital networks – in fact, 82% of health systems reported experiencing an IoT cyberattack in the last 18 months. Additionally, beyond critical infrastructure, organizations of all kinds are increasingly reliant on CPS to run their building management systems (BMS), surveillance cameras, heating, ventilation, and air conditioning (HVAC) systems, and many other physical processes.
Gartner predicts that “by 2024, 80% of critical infrastructure organizations will abandon their existing siloed security solutions providers in order to bridge cyber-physical and IT risks by adopting hyper-converged solutions.”
“We built the industry’s first dedicated healthcare IoT security platform, which was named 2021 Best in KLAS for Healthcare IoT Security in the KLAS Software & Services Report, to empower healthcare providers to deliver secure, connected care,” said Jonathan Langer, co-founder and CEO of Medigate. “Becoming a part of Claroty means our customers will not only continue to receive the best security for their healthcare IoT devices, but will also gain coverage for the wide array of industrial IoT assets in their networks, without having to stitch together disparate tools for each.”
“As the world continues to rapidly digitize, cybersecurity is becoming a top priority for most organizations,” said Heriberto Diarte, CEO of SE Ventures, Schneider Electric’s investment arm. “We are pleased to be part of this funding round and continue our partnership with Claroty, who has developed the leading industrial cybersecurity platform to protect and manage OT, IoT, and IIoT assets, and is now extending that expertise into healthcare to protect the XIoT.”