Congratulations Nozomi Networks on Raising a $7.5M Series A Financing

Congratulations Nozomi Networks on raising a $7.5 million Series A financing. Our team at GGV Capital is excited to be working with Nozomi and I’m delighted to have joined the company’s board of directors. Nozomi is a true innovator in helping monitor and secure industrial control systems (ICS). ICS systems pervade every aspect of our existence. From the electricity and gas we rely on to power our lives to the water we drink, the medicine we ingest, the planes we fly, the trains we take and the cars we drive, ICS systems play an integral role in enabling our modern existence. ICS systems are increasingly connected, via IP, to computer networks, and are thus very susceptible to hacking. As industrial targets have become more prevalent for hackers and awareness of this risk has grown, the need for a solution like Nozomi’s has intensified. We’ve seen the market move quickly, and the time is right for Nozomi. Our investment thesis derives from the team, the technology and the market.

Team. We first met Nozomi co-founder Andrea Carcano in mid-2015, and we were immediately struck by his unique understanding of industrial control systems, SCADA protocols and the correct approach for discovering, monitoring and securing these systems. Andrea actually wrote his PhD thesis on this topic and then spent several years working in the oil & gas industry, helping refine his approach. He and his co-founder, Moreno Carullo, have brought a product to market that delivers immediate value, scales to very large environments and is universally loved by the many customers with whom we’ve spoken. Andrea and Moreno, seeking to build a global leader, have opened headquarters in the US and brought on Edgard Capdevielle, who we’ve known and respected for many years, as CEO to help build out the go-to-market functions. Andrea, Moreno and Edgard form a powerful team to help Nozomi achieve its mission of protecting ICS systems.

Technology & Approach. Traditional cyber security solutions monitor IP traffic, assess the behaviors of physical and virtual machines, identify malware, spot other attacks and are designed to thwart hackers. Because ICS systems rely on different protocols, traditional security products are ineffective in industrial environments. Attacks levied against ICS systems are very different than IP-based attacks – they’re more logical in nature, seeking to cause disruption by modifying control sequences and tolerance ranges, for example. Nozomi’s system is purpose built to help plant operators inventory their entire ICS networks and protect against these types of logical attacks. Many traditional cyber security companies have recognized Nozomi’s unique capabilities and we expect a growing list of partnerships to result as well.

Market Growth. The now well-documented Stuxnet attack perpetrated by the US and Israel to slow the development of Iran’s clandestine nuclear weapons program via the systematic destruction of centrifuges ushered in the era of ICS attacks. Since then, reports of ICS based attacks have become much more frequent. Malware capable of attacking ICS systems such as BlackEnergy is now widely available and hacking groups have become more emboldened to target critical infrastructure. As a result, a growing number of utilities, oil & gas companies and others with ICS systems as part of their infrastructure are seeking out Nozomi to help address critical vulnerabilities. With the total ICS/ SCADA market estimated at over $200 billion in ’15, the global opportunity for Nozomi is quite vast.

We’re looking forward to an exciting future for Nozomi. The world needs a solution to protect critical infrastructure, and Nozomi is in prime position to help!

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