Mar 5, 2024 - Technology

Exclusive: Alphabet funds insider risk company

Illustration of pile of money with hovering cursor

Illustration: Eniola Odetunde/Axios

CapitalG, Alphabet's venture capital fund, is investing $50 million in Series E funding in insider risk company Dtex Systems, the companies first tell Axios.

Why it matters: The tech giant's investment gives a vote of confidence to Dtex's bet that insider risk will become the next big cybersecurity market.

  • CapitalG has invested in major cybersecurity companies like CrowdStrike and ZScaler.

Zoom in: Dtex is now valued at more than $400 million after this new funding, a company spokesperson told Axios.

  • The company — which has now raised a total of $138 million —plans to use the funds to expand its U.S.-based engineering teams and marketing operations around the world.
  • Dtex CEO Marshall Heilman told Axios the company is working to expand its client base to more U.S. government customers and Fortune 500 companies.
  • James Luo, a partner at CapitalG, will join Dtex's board of directors.

How it works: Dtex uses machine learning to analyze network activity and company endpoints to flag potential insider risks, such as disgruntled employees stealing data or hacked employee accounts.

  • Flagged activity could include employees logging into their accounts from an unusual location, exfiltrating a large amount of corporate files and resetting an account password too many times.

The big picture: CapitalG's investment comes as cybersecurity startup funding hits a five-year low, as total funding dropped 50% between 2022 and 2023, according to Crunchbase News.

  • Dtex last raised funding four years ago in a $17.5 million Series D round led by Northgate Capital.
  • Heilman joined the company as CEO in December after nearly 20 years at Google Cloud's Mandiant.

What they're saying: "I had always known that CapitalG was my white whale, they were the ones I wanted to land if it was possible," Heilman said.

  • "I wanted someone who is going to be in the business and helping us while not trying to take over the business," he added. "CapitalG was the perfect medium to do that."

Between the lines: Insider risk has become a growing area of interest for companies.

  • 46% of organizations plan to increase their spending on insider threats in 2024, according to a recent report from Dtex and the Ponemon Institute.

What's next: Heilman added that while Dtex is focused on insider threat, he is eyeing product areas where the company could grow in using the data it's collected from its insider risk monitoring tools.

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