Security Firm iPolicy Networks Tracks Down $26M Series A Round

VentureWire, Feb 2, 2004

Fremont, Calif. -- iPolicy Networks, developer of a unified security system that delivers adaptive security enforcement for enterprises, managed security service providers, and government agencies, is expected to announce it has raised more than $26 million in its Series A round.

The round was co-led by new investors WK Technology Fund, Clearstone Venture Partners, and Dali Hook Partners.

iPolicy was formed in January 2000 through the merger of Duet Technologies of India and TunnelNet. The new investors bought out all shares previously held by Greylock, Morgan Stanley Venture Partners, and Technology Crossover Ventures, which had all previously backed Duet.

The proceeds from this round will be used for sales and marketing and working capital. The company has been generating revenue for about two years, and chairman and CEO Prabhu Goel said the company should become cash-flow positive in the middle of next year. Mr. Goel doesn't not anticipate raising another round of financing unless it is to prepare for an IPO. He expects the company will pursue an IPO some time in late 2005.

Mr. Goel said the company first targeted carriers and managed services providers and landed a large carrier as a customer. Despite the downturn in the carrier market over the last couple years, he said the market is starting to pick up and the company is in about five trials with carriers. The company also launched its ipEnforcer 3000 Family First Unified Adaptive Security Systems for enterprises. The ipEnforcer 3000 addresses the convergence of multiple, disparate, network security devices and provides multiple security services including intrusion detection and prevention, DDoS and attack mitigation, deep application inspection firewall, VPN, anti-virus, surveillance, and URL filtering.

With the My Doom virus already costing companies millions of dollars, Mr. Goel said the virus is forcing enterprises to work on protecting their internal networks, rather than the perimeter, where he said they are typically focused. iPolicy's products enable enterprises to segment their networks, which prevents a contaminated portion of the network from spreading, by screening traffic flowing from one segment to another. Mr. Goel said most of the company's competitors are still focused on protecting the perimeter.