Thanks to advances in AI, small and medium-sized businesses have become important targets in the world of cybercrime, accounting for about half of all breaches worldwide by some estimates. Now, one of his companies, which builds security tools for small and medium-sized businesses, has raised funding to expand its business, highlighting the market demand for better protection.
Guardsan Israeli startup building an all-in-one security and cyber insurance service for small and medium-sized businesses, has raised an additional $18 million in a Series A round.
The company came out of stealth less than a year ago (at the end of January 2023) and has undergone a bit of a pivot since then. Although the company does not currently sell directly to SMBs, it partners with managed service providers that sell and manage IT services for SMBs. It turned out that the MSP was the primary route to getting his product used by his SMBs (i.e. the direct business wasn’t taking off). These MSPs can now build their own products “powered by” Guardz.
“This is the journey. It’s a mixed solution powered by Guardz, but with the MSP logo on the front,” CEO Do Eisner said in an interview.
The plan is to use the funds to hire more engineering talent to continue the evolution of Guardz products, which are sold primarily to customers in the US, UK and Australia. Currently, there are approximately 200 registered MSPs, of which we work with approximately 3,000 SMBs, with approximately 36,000 seats in total using Guardz’s products. Security remains the primary revenue driver, with cyber insurance added as an option.
Glilot+, the early growth fund of Glilot Capital Partners, led the round, with participation from ClearSky and previous backers Hanaco Ventures, iAngels, and GKFF Ventures.
The company hasn’t disclosed its valuation, but Eisner, who co-founded the company with Aron Ravi, said the figure has been around since its last funding round, a $10 million seed round that coincided with Guardz coming out of stealth mode. said it has tripled.
To give you a little more background, the startup has now raised $28 million and has secured around 36,000 “seats” and more as there are around 150,000 MSPs serving the SMB market worldwide. Eisner said the company is rapidly growing into an interesting opportunity for its customers. This would likely put Guardz’s valuation comfortably above $100 million.
The market gap that Guardz is targeting is large and pressing. Until now, SMBs have been largely ignored by cybercriminals for the same reasons they were largely ignored by cutting-edge B2B technology developers. SMBs are too fragmented as a group to typically achieve favorable ROI compared to large enterprises.
However, advances in AI have made it much easier for malicious actors to develop, execute, and scale campaigns that exploit vulnerabilities. This is a worrying development. This is because small businesses typically lack the in-house expertise and appropriate tools to combat this.
Guardz’s goal is to create a security platform for these customers that is as robust as those used by large organizations. This platform is offered as a managed service. This means that while customers have little direct control over the platform, there is a lot of AI-based automation built into their managed services. Guardz’s tools automatically detect malicious activity, provide remediation for it, and generate activity reports that can be further prioritized by the MSP. MSPs can also use Guardz to create breach simulations tailored to the specific activities of the SMB in question. This can be used to train your customer’s employees.
A portion of the funding will be used to help the team continue to expand the tools at hand to keep pace with the growing sophistication of malicious attackers.
“Every day we discover new techniques that hackers use,” Eisner said. He said recent discoveries include a way to create auto-forwarding rules for users using Microsoft 365 that allow malicious attackers to collect emails “in a silent manner.” I was given a way to do it.
“We saw that people were talking about this attack on the dark web, so we decided to develop detection and remediation around it,” he said, adding that such techniques are part of a multi-vector attack. He added that it is likely to be used as a division. For example, phishing.
Small businesses are becoming tougher targets for technology companies building enterprise services, not just because innovations in cloud services and AI have improved unit economics. It is also because it is a huge market segment that is estimated to account for more than 99% of all business worldwide. And that can mean big business in a variety of areas. Earlier this week, SumUp, a payments and fintech business also targeting small and medium-sized businesses, announced more than $300 million in funding to expand its platform and expand its customer base. Guardz isn’t the only company he works on when it comes to building cybersecurity for SMBs. The long list of direct competitors also includes his Cyber Smart in the UK, as well as major companies such as CrowdStrike and Check Point.
“When we met the great team at Guardz, which combines cybersecurity leaders and small business go-to-market experts, it became clear that they were building the ultimate solution for small business cybersecurity. “This is a rapidly growing market need that we have seen for many years. We will be monitoring Grillot for some time,” Lior Litwak, Managing Partner of Grillot+, said in a statement. “Guardz has developed an impressive, comprehensive, and user-friendly cybersecurity and cyber insurance risk assessment platform that is expertly tailored for MSPs serving the often overlooked long-tail small business market. We are excited to lead this funding round and join the Guardz team on its journey to securing the digital world for those who need it most today.”