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April 15, 2016updated 05 Sep 2016 11:25am

Inside CrowdStrike: What does Google’s first cyber security investment tell us about its security plans?

C-level briefing: CrowdStrike's CTO and co-founder explains what his company is doing differently and why that attracted investment from the world's most valuable company.

By Alexander Sword

As a technology company with an extensive investment arm, Google invests in start-ups and fast-growing companies in a wide range of areas, but the company has until quite recently steered clear of cyber security investments.

Google made its first public investment in security in July 2015 with the company CrowdStrike, leading the company’s Series C funding round, which in total raised $100 million. To date, CrowdStrike has achieved total funding of $156 million, with other investors including Rackspace Hosting Inc in the most recent funding round and earlier investors Accel and Warburg.

So what attracted Google’s capital to the company and does it reveal anything about the company’s plans in the security arena?

Google’s engagement with security has generally been in providing security to its existing platforms, products and services, rather than providing security products themselves.

Gene Frantz, partner at Google Capital, said at the time of the investment that his team was "blown away by CrowdStrike’s incredible growth and impressive customer adoption".

Frantz described the company’s SaaS-based endpoint security model as "truly unique," adding that they had a "highly scalable subscription revenue model, and a visionary technical approach that has huge potential to transform the industry."

CrowdStrike essentially questions the effectiveness of traditional antivirus and malware-centric security approaches. The Falcon platform aims to solve this deficiency by enabling organisations to detect, prevent and respond to attacks at any stage, even if malware is not involved.

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In March, CrowdStrike announced the launch of EMEA operations with the opening of a corporate office in the United Kingdom. The office is led by Mike East, VP of Sales, EMEA at CrowdStrike, formerly of Fire Eye, and its launch follows a 200 percent increase in CrowdStrike’s business in the EMEA region.

"Google Capital has the mission of investing in technologies in which Google has an interest and they are making money for Google. They are not a charity and have to make a return back to the parent company," says CrowdStrike’s CTO and co-founder Dmitri Alperovitch.

Alperovitch, formerly in charge of threat research at McAfee, founded the company after seeing a gap in the market for a company that provided a comprehensive overview of all breaches.

"They are a technology company so they are naturally fascinated by cool technologies," says Alperovitch.

He cited the way the company does things in the cloud and how it addresses machine learning as reasons for the investment.

Alperovitch says that Google’s investment was a "game-changer" for CrowdStrike, "not just in terms of the money, but Google are arguably one of the best technology companies in the world."

In particular, the support of Google going to them rather than CrowdStrike’s competitors was an enormous validation of the company.

"When they do due diligence, unlike typical VC firms, they actually bring the guys who run their cloud or machine learning and vet you," he says.

Aside from the money, Google brings the accumulated technologies and expertise of the world’s most valuable technology company.

"They are genuinely interested in having us succeed," says Alperovitch, who recently met Sergey Brin, President of Alphabet, adding that they have visibility at the highest level of the company.

crowdstrike

"We can leverage the various capabilities that they have," he says.

However, for now the help focuses on Google’s people, who provide valuable expertise.

"Spending two or three hours with someone who can really help you accelerate and share their knowledge is very helpful," says Alperovitch.

He says that he cannot speak for Google’s plans in the future regarding security, however.

Since the investment in CrowdStrike, Google has invested in several other cyber security start-ups.

In January, Pindrop, a start-up based in Atlanta and specialising in preventing identify theft and voice fraud, secured $75 million in funding in a round led by Google Capital.

In September, Google invested in Zscaler, an Internet security company, in a $25 million continuation of its Series D round. In total in that round Zscaler raised $110 million.

It may be some time before an overall cyber security strategy at Google becomes clear, but for now, the company seems to be making up for lost time with a series of investments.

 

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