Why most, if not all, “New Generation” endpoint security product are not self-sustained?

TOPICS:Clavister Code42 Crowdstrike cybersecurity Cylance Cyphort Fire Eye HackerOne Invincea new generation ng Sentinel One Trustlook Venafi

Posted By: Sorin Mustaca December 5, 2016

Fire Eye, Sentinel One, Crowdstrike, HackerOne, Cylance, Cyphort, Trustlook, Venafi, Clavister, Invincea, Code42, just to name a few, are so called NG Cybersecurity startups.

NG comes from “New Generation” or “Next Generation”… (Yeah, just like in StarTrek. 🙂 )

What exactly are these “NG” products and services?

There is no single definition that fits them all. Here are the common features:

All of them have a cloud backend.
Some install an agent on each machine, some install an appliance that acts as a sniffer in the network. Some others must be installed on the default gateway where they take control of the more important entry and exit points in the network.
All of them analyze events in the network and send them in a form or another for analysis to the backend
Some filter just DNS traffic, some filter just web traffic, some filter everything
Combinations of above are definitely the case.
None of them is installing a classical AV engine to end customers (GW or End-point)
My guess (not able to prove it, though) is that they have a form of classical antivirus in the backend which is used as a “second” opinion scanner.

The list can be enlarged… it is by no means complete…

More questions instead of a Conclusion

So, why aren’t they self-sustained and keep raising money? Almost every month I hear that another NG security company has raised funds: A, B, C or they have been acquired.

I mean, if they’re doing fine, why to do they raise more funds?

First thing which is quite obvious: they spend more money than they make.

But, why? Are they bad at managing money?

I don’t know that… maybe they invest a lot in research… Maybe too much?

Or is this just a big hype and not enough businesses are paying for their products?

Probably the truth is somewhere in the middle.

Here is something interesting:

Venture capital firms invested heavily in next generation security products and services. 2015 was a record year for fundraising with an estimated $2.3 billion-$3.3 billion invested, in comparison to 2014’s fundraising total of $2.5 billion.. 2015’s fundraising total was more than 4x that of 2010.

Source: securitysales.com

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Sorin Mustaca

Sorin Mustaca, (ISC)2 CSSLP, CompTIA Security+ and Project+, is working since over 20 years in the IT Security industry and worked between 2003-2014 for Avira as Product Manager for the known products used by over 100 million users world-wide. Today he is CEO and owner of Endpoint Cybersecurity GmbH focusing on Cybersecurity, secure software development and security for IoT and Automotive. He is also running his personal blog Sorin Mustaca on Cybersecurity and is the author of the free eBook Improve your security .