Industrial cybersecurity giant Dragos rakes in new funding, sets sights on global expansion

Today, Dragos revealed that it has secured a $74 million Series D extension funding round, spearheaded by the strategic operating and investment firm WestCap.

The funding extension comes when global governments and infrastructure providers increasingly acknowledge the critical role of industrial cybersecurity, necessitating enhanced focus on their ICS/OT settings.

In an interview with Help Net Security, Darren Sankbeil, CFO of Dragos, discusses the significance of this investment for the firm amid the rising urgency to safeguard ICS/OT ecosystems.

The Series D extension led by WestCap has brought the total Series D funding to $274 million. What does this level of investment signal about the state and future of industrial cybersecurity?

Despite recent reductions in some IT cybersecurity budgets, OT security is a relatively new market that will continue to expand rapidly for the rest of this decade and beyond. This surge in investment coincides with a pivotal year marked by irreversible shifts in the industrial threat landscape and increasing demands from governments and infrastructure providers globally.

Previously, OT threats were limited in that they had to be custom developed for a specific industrial environment and even a single location. However, PIPEDREAM represented an evolution in OT-specific malware to be capable of broader and faster attacks because it is scalable across the full range of industrial sectors. Thus, industrial organizations are recognizing the importance of industrial cybersecurity and demanding more attention to their ICS/OT environments. And governments are launching initiatives to protect critical infrastructure, such as the Biden administration’s National Cybersecurity Strategy this year. Internationally, government initiatives across Europe, the Middle East, and Asia-Pacific are taking similar measures.

The funding is earmarked for go-to-market initiatives and accelerated expansion in various regions and industries. Could you elaborate on which markets and sectors Dragos considers most crucial for its growth?

The potential customer base for Dragos is continuously expanding as various industrial sectors adopt our technology. Building upon the growth we have consistently witnessed in our core markets in North America, Australia, and the GCC, we have identified Europe and Asia-Pacific as emerging opportunities for our company.

Furthermore, during the second quarter of this year, we experienced a notable diversification in the sectors represented among our new clients. In addition to our historically strong presence in the Electric, Oil & Gas, Water, and Federal Government sectors, we are seeing the Manufacturing, Food and Beverage, and Technology sectors increase in prominence as a percentage of our business. These trends indicate exciting prospects for continued growth and expansion for our customer base.

Dragos has expanded across Western Europe and the DACH region and also entered into an agreement in Japan. What are the global challenges and opportunities in scaling ICS/OT cybersecurity solutions?

At Dragos, we focus on providing best-in-class OT cybersecurity products and services that meet the requirements of all customers from a diverse set of sectors and regions. Maintaining a consistently high level of quality in our delivery of all our products around the world is what we strive for and what our customers expect. We launched the Dragos Global Partner Program this year, the only channel program to comprise OT cybersecurity technology, services, and threat intelligence as well as training. The program is allowing us to scale worldwide while ensuring partners have the skills and capabilities to deliver our OT cybersecurity solutions with the highest quality and customer satisfaction.

Partner interest in joining the program has been very strong, and one example is that we signed an agreement with Macnica to provide our cybersecurity solutions in Japan. We also work closely with regional governments to meet their unique needs and recently signed a three-year Memorandum of Understanding (MOU) with the Cyber Security Agency of Singapore (CSA) to support the country’s efforts to defend against cyber-attacks to its operational technology and critical infrastructure.

According to Frost & Sullivan, the global industrial cybersecurity market is set to grow from $3.3 billion in 2020 to $10.2 billion by 2025. What factors drive this exponential growth, and how is Dragos positioned to capture this market?

The exponential growth projected for the global industrial cybersecurity market, as highlighted by Frost & Sullivan, is driven by several key factors. The increasing awareness among companies of the cybersecurity challenges faced by their operations is leading to a higher rate of adoption for solutions like Dragos’s. As the threat and regulatory landscape evolves, organizations recognize the imperative need to safeguard their industrial control systems.

Dragos is strategically positioned to capture this growing market for several reasons. We offer a comprehensive blend of both software and services, allowing us to tailor our solutions to meet customers at various stages of their OT cybersecurity journey. This flexibility enables us to serve as a trusted advisor to our clients, assisting them in navigating the complex landscape of industrial cybersecurity.

The Dragos Platform is technology built for practitioners by practitioners that arms industrial cybersecurity teams with the most up-to-date defensive tools, codified by our experts on the front lines every day hunting, combatting, and responding to advanced ICS threats. Customers get comprehensive visibility of the OT assets and threats in their systems, with best-practice guidance to respond before a significant compromise.

Our commitment to delivering best-in-class products and forming strong partnerships with our customers has positioned us as a leading provider of OT cybersecurity solutions today. This customer-centric approach not only distinguishes us in the present but also sets the foundation for our continued leadership in the ever-evolving industrial cybersecurity market in the future. By consistently adapting to emerging threats and client needs, Dragos remains committed to offering the most effective technology solutions in the market.

What can we expect from Dragos in the next 2-5 years, particularly with this fresh capital injection? Are there any technologies or strategies on the horizon?

Over the next 2-5 years our primary focus will revolve around strengthening and expanding our core software and services offerings. These foundational solutions have shown remarkable potential, but our commitment to growth and innovation remains steadfast.

As we move forward, we will actively seek opportunities to enter new sectors and geographies, extending our reach and impact in the realm of industrial cybersecurity. However, it’s important to note that our approach is rooted in customer-centricity. We understand that the threat landscape demands continuous adaptation, and we are committed to listening to our customers. Their feedback and needs will drive our innovation efforts, ensuring that we remain at the forefront of the industry.