Call a cybersecurity startup Cyera is betting that the next big challenge in protecting business data will be artificial intelligence and is raising a big round of funding as demand for it grows.
The company — which makes AI-powered tools to build accurate pictures of where and how data is being used in organizations’ networks — is close to closing a nearly $300 million round, tripling its valuation to $1.5 billion in the process, according to sources close to the deal. Renowned venture capital firm Coatue is leading the funding round, the sources said.
The deal is expected to close in early April. It is unclear who other investors are participating in this round. Before that, Cyera—pronounced “Sierra” and based in San Mateo with roots in Israel—had raised a total of $160 million at its current $500 million valuation dating back to last year.
Cyera’s past backers include Sequoia (which led both of its previous rounds, including a $100 million round last June), Accel, Redpoint, and Israeli firms Cyberstarts and Cerca Partners, among others.
Cyera, Coatue and Sequoia declined to comment.
There were rumours of this round they circulate earlier this month. Since then, we can confirm that the amount raised has increased by approximately $150 million, and until now, no names of investors were known.
This latest investment by Cyera is notable for two reasons.
First, it highlights how cybersecurity — despite broader pressures in the tech economy and venture capital market — continues to attract businesses, investors and big checks — even from companies like Coatue that have backed away from some of their more flamboyant bets. (Note, Coatue close (a relatively new venture office in London earlier this year, a sign that it will be considerably less active in Europe in the future.)
Second, this round sheds new light on the huge role artificial intelligence plays in the technology market today.
Startups like OpenAI and Mistral continue to attract large investments to build large language models, and it’s rare to find an organization today that isn’t evaluating how to use more AI in their business. But increasingly, information security teams are also recognizing the problems that AI can create.
Yes, AI is being harnessed by malicious hackers to breach networks and is helping cybersecurity companies (like Cyera itself) fight bad actors and gain better access to corporate data.
But more unwittingly, it also plays a different role: Companies themselves, interacting with AI services like chatbots or productive AI applications, run the risk of violating their own internal intellectual property and data protection policies. Cyera intends to address the second of these scenarios as well.
A source said AI is currently a “huge driver” for business at Cyera. But interestingly, the startup didn’t aim to create tools to determine how and where the data would be exposed and could be misused in AI applications per se.
Its focus was initially more general — working with companies in industries such as healthcare, technology, financial services, manufacturing, retail and travel to provide tools for data classification, posture management (snapshots that help track how and where data is), detection and response, and access governance.
This business has driven, from what we understand, tens of millions of dollars in current ARR for the startup.
More recently, however, Cyera has noticed a shift in what its customers are asking to watch, a source tells us.
Many organizations are bringing more automation to their networks, and the concern is that this too will make it much more difficult to categorize and control the use of sensitive data. “It’s everything businesses need to do to prepare for AI,” he said. “AI is a data problem.”
