Germany’s VMRay ties up $34 million series B to expand threat detection and analysis

Germany-based cybersecurity startup VMRay has closed a $34 million series B round to support expansion of its advanced threat detection and analysis services into new target markets.

The round is led by Tikehau Capital, an alternative asset management firm, participating through its subsidiary unit Tikehau Ace Capital as well as its European cybersecurity growth fund.

Tikehau is joined by two of VMRay’s existing investors – the German public private partnership High-Tech Gründerfonds and venture capital firm eCapital – as well as new partners NRW.BANK and Gründerfonds Ruhr.

VMRay is spearheaded by the malware analysis and detection trailblazers Dr. Carsten Willems and Dr. Ralf Hund, renowned for pioneering hypervisor-driven virtual sandboxes to emulate the user’s IT environment, and the impact of potential malware risks. Their reputation led to VMRay’s formation in 2013.

Since then the core sandbox technique has been matured through the use of machine learning that is increasingly used to automate the detection of novel malware threats.

Malware is a broad catch-all term for any malicious program loaded onto IT systems. It causes colossal damage to organizational IT, everywhere from banking transactions to secure government data and even medical patient records.

Millions of dollars have been paid to recover sensitive data that’s been locked away by a single ransomware breach. In addition, data leaks can cause significant reputational damage.

Some observers believe traditional malware attacks like phishing have faded in prominence this year, as attackers have pivoted to less guarded entry points like IoT and email.

That makes machine learning a vital component in enterprise malware cybersecurity, allowing enterprises to neutralize newly-emerging threats ahead of time. VMRay’s cybersecurity algorithms and intelligence are mainly designed to support human cybersecurity experts, usually working in SOCs (security operations centers).

Williams said: “The cyber threat landscape is going through a profound change, and with the increasing volume and complexity of new threats, our customers face new challenges.”

According to VMRay, the company has worked alongside four of the world’s five biggest tech companies, 37 “leading” financial companies and 56 state agencies.

The series B capital is expected to help VMRay deliver new products based on its core automated threat analysis technology, which should enable it to join forces with clients in a wider range of market segments.

Commenting from High-Tech Gründerfonds’ perspective on the deal, investment principal Dr. Ulrich Schmitt said: “VMRay has managed to uniquely position themselves in the market, complementing existing solutions as the extra layer of security that is needed to combat advanced and unknown threats.

“Having built a strong foundation for further international growth, the company is set to become the global leader in advanced threat detection, and we are excited to support the VMRay team in the years to come.”

Augustin Blanchard, executive director at Tikehau Capital, added: “In our role as cybersecurity-focused experts, we were impressed with VMRay’s unique value proposition: building more effective detection tools integrated or interfaced with larger cybersecurity solutions. VMRay’s ability to automate detection is a clear differentiator, positioning it as the tip of the spear in the global effort to elevate cybersecurity standards globally.

“We firmly believe the company will sustain scalable, explosive growth in the coming years, driven by skilled leadership and powerful market tailwinds.”