momentum partners' security sector strategic landscape (q2 2015)

1

Security Sector Strategic Landscape

Q2 2015

Enterprise Class Advice. Aligned With The Entrepreneur.

Momentum Partners, LLC •  Advise. Network. Invest.

Strategic Financing

Momentum Partners Enterprise Class Advice. Aligned With The Entrepreneur.

2

Why Momentum Partners?

We are a bespoke, next-generation advisory + networking +

investment firm designed to serve and evolve with the

entrepreneur’s company, throughout its entire life cycle.

Security � Enterprise IT � Cloud & Saas��

Mobile � Consumer Internet � eCommerce � Digital Media��

Mergers & Acquisitions � Capital Raising � Strategy & Corp Dev��

Ecosystem Development � Board & Investor Relations

150+ Deals $150+ Billion

Momentum’s Security Team Michael Tedesco Executive Chairman Founder Strategic and Capital Markets Advisor to CEOs, Founders & Boards

Eric McAlpine Managing Partner Founder Senior Advisor Engineer

Dino Boukouris Principal Strategic Advisor Start-up Advisor VC & Private Equity

Keith Skirbe Principal Strategic Advisor Mergers & Acquisitions Deep Security Software Expertise

Dealmakers in Security & Enterprise IT CLIENT COUNTERPARTY CLIENT COUNTERPARTY CLIENT COUNTERPARTY CLIENT COUNTERPARTY CLIENT COUNTERPARTY

Q2 Security Market Update & Observations Cybersecurity Continues To Be One of The Most Active And Best Performing Sectors In IT.

3

Exits: M&A & IPO Activity

Industry Observations

Valuations

Investment Activity

§  Two significant ‘bookend’ acquisitions highlighted activity in Q2 (Websense & OpenDNS), while the remainder of the quarter saw mostly tuck-in acquisitions to round out product portfolios

§  Despite a weak broader Tech IPO market, two security companies managed to price their IPOs, with Sophos going to market in June and Rapid7 in July

§  Total disclosed Security M&A volume for Q2: $3.6B Raised $125M @ $1.6B Raised $103M @ $605M

§  While deal flow has trended down over the last four quarters, Q2 saw the highest quarterly cybersecurity funding since 2Q14, with $704M invested across 47 deals

§  $1.2B has been invested YTD across 99 deals compared to $1.4B invested across 126 deals in prior year period

§  The largest and most notable deal of the quarter was Illumio’s $100M raise at a $1B valuation

§  The public markets have put a premium on growth with our High Growth Security comps +18% during Q2 and +36% YTD while our Traditional (low growth) Security comps were up only +1% during Q2 and -2% YTD, relative to the NASDAQ which was +2% during Q2 and +8% YTD

§  Sophos is +13% above its IPO price while Rapid7 surged +58% on its first day of trading and is currently trading +24% above its IPO price

Quarterly Stock Price Performance

25% 20%

18% 59%

13%

§  Big data analytics, machine-learning and user behavior analytics are increasingly becoming a foundation element for next-gen security products combatting advanced attack threats

§  The adoption of public cloud infrastructure and SaaS solutions in large and mid-size enterprises continues to drive investment and acquisition in the cloud security space

§  Protection ---> Detection. Consolidation within the EDR space is a must as EPP providers incorporate EDR capabilities (some through M&A)

Notable M&A Transactions – Q2 Two Key Transactions Highlighted M&A Activity In Q2.

4

Acquires

§  Raytheon entered into an agreement with Vista Equity Partners to form a new entity combining Websense and Raytheon Cyber Products, a $400M business unit of Raytheon’s Intelligence, Information and Services (ISS) segment

§  As part of the transaction, Raytheon will contribute $1.6B in cash for an 80% stake in the new entity, of which $600M will be a loan, while Vista Equity will contribute $335M to the new venture for a 20% stake

§  This acquisition comes on the heels of Raytheon’s acquisition of another cybersecurity firm, Blackbird Technologies, for $420M in November 2014. Raytheon was also rumored to have considered acquiring Blue Coat

§  The new company will leverage Raytheon’s advanced cybersecurity technologies and Websense’s TRITON® platform to provide a new level of defense-grade cybersecurity to combat the evolving cyber threat environment

§  Raytheon asserted it is making the right move into cybersecurity citing “sophisticated threats” to “industry and infrastructure” clients under attack by “well-funded, nation-state adversaries and criminal networks”

§  OpenDNS was founded in 2005 by David Ulevitch, who started the company straight out of college and raised $51M, including a $35M round in May 2014 with Cisco as a minority investor. Other investors included Greylock Partners, Sequoia Capital, Sutter Hill Ventures, Lowercase Capital, Northgate Capital and Mohr Davidow

§  OpenDNS provides a cross-platform online threat protection service that Cisco says it will use to boost its own security, adding “broad visibility and threat intelligence from the OpenDNS cloud delivered platform”

§  The purchase of OpenDNS “shows that there is still a transition happening between hardware and software in Internet traffic and security management. The deal highlights the importance of the DNS layer…it’s the control plane of the Internet – you can build great products and companies on this foundation” says Jeremy Hitchcock, founder/CEO of Dyn

§  The acquisition of OpenDNS marks the first significant acquisition for Cisco since it announced Chuck Robbins will take over as CEO

Date: 4/20/15 Ent. Value: $1.9B

Ent. Value / Rev: NA Ent. Value / EBITDA: NA

Acquires

Date: 6/30/15 Ent. Value: $635M


Source: Deal metrics per Capital IQ.

Notable M&A Transactions – Q2 Mobile Security and Managed Security Services Highlighted Key M&A Activity in Q2.

5

§  The deal is worth up to $60M, with $40M paid in cash at closing and up to $20M in cash one year after closing based on Privax reaching certain milestones

§  The acquisition adds Privax’s HideMyAss! Pro VPN privacy service to AVG’s mobile and desktop offerings

§  Privax has more than 250k paying subscribers using is VPN encryption service, while its free web-based proxy service attracts a global audience of over 8M unique visitors per month

§  Marlin Equity acquired Fidelis, General Dynamics’ cybersecurity business it acquired less than three years ago

§  General Dynamics’ move was part of an overall “portfolio shaping” to shed assets non-core to its government business

§  Marlin Equity will leverage its financial and operational resources to accelerate Fidelis’ product development and sales & marketing

§  Fidelis recently announced the acquisition of Resolution 1 Security, a provider of endpoint threat detection & incident response solutions

Acquires



§  Singtel entered into an agreement to acquire a 98% stake in Trustwave while Trustwave’s Chairman/CEO will retain the remaining 2%

§  The acquisition is Singtel’s latest effort to expand its security capabilities. It recently launched security operation centers in Singapore and Australia in partnership with FireEye

§  Trustwave provides its managed security services to 3M business subscribers in 96 countries and will operate as a standalone business unit of Singtel

§  Acquisition marks Check Point’s second acquisition in Israel in 2015, having acquired Hyperwise in February. Check Point plans to hire 600 workers in Israel to boost its R&D efforts

§  Lacoon’s product is used by customers Samsung, Intel and Dell, and will be integrated into Check Point’s own mobile security solution, Capsule

§  Lacoon was founded in 2011, has 40 employees and can support up to 300k mobile devices

Acquires


Ent. Value / Rev: 3.8x Ent. Value / EBITDA: NA

Acquires

Date: 4/14/15 Ent. Value: NA


Acquires

Date: 4/02/15 Ent. Value: $80M* * Calcalist


Source: Deal metrics per Capital IQ.

Momentum’s Quarterly ‘Watch List’ Selected Private Companies With “Momentum” That We Are Tracking.

6

$42.8M

Company / $ Raised

Description / Commentary

§ Vectra’s approach to security is to assume the network is already penetrated. Vectra analyzes inbound/outbound Internet traffic as well as traffic moving laterally across internal networks to detect attacks and suspicious host behavior from malware

§ Recognized by Gartner as one of the “cool” vendors in security intelligence that offers “highly innovative” technologies that address an organization’s demand for data-driven analytics and advanced detection solutions

$77.0M

§ “The Next Generation of Antivirus” – Cylance is the first company to apply artificial intelligence, algorithmic science and machine learning to cybersecurity

§ Cylance builds a mathematical model of how software should work and prevents anything else from running, resulting in an AV/anti-malware program that requires only 30Mb of space and doesn’t need frequent updates or a database of signatures

§ Calling itself the leader in “Enterprise Immune System technology”, Darktrace is based on new mathematics and machine learning developed at the University of Cambridge

§ Darktrace’s technology is capable of learning ‘self’–what constitutes the normal pattern of life of the organization, its users and devices–and detecting subtle deviations from this normal behavior, which suggest a compromise, breach or cyber-attack

$40.5M

§ RiskIQ’s SaaS service combines cloud-based intelligence and analytics with a worldwide proxy network and software that emulates real users to expose malware on websites, in mobile apps and advertisements

§ “We were very impressed with RiskIQ’s technology, team and vision for addressing a problem that is big and just getting bigger,” said Michael Brown, General Partner at Battery Ventures and Board member of RiskIQ

$35.0M

§ Elastica is the leader in Data Science PoweredTM cloud application security and is among a fast growing club of cloud security startups combining data science and machine learning to help companies and employees secure SaaS data

§ Elastic runs a broad spectrum of services from risk assessment and threat detection to incident response, post-incident analysis, company data policy formulation and employee education

$36.3M

§ Menlo Security recently emerged from stealth to combat web-based attacks with its Isolation platform, which makes use of Linux containers to limit risks. Inside the container is a full-fledged browser that will load all of the content from a given website or email and as content get isolated, it never makes it to the endpoint

§ The product is available as either a hosted SaaS offering or a virtual appliance for on premises and does not require an agent or software

Company / $ Raised

Description / Commentary

$35.0M

§ Exabeam is a big data security analytics company that uses advanced user behavior intelligence to track employees’ activities on a network and alert security teams of anomalous activity. Exabeam uses extraction and enrichment of log feeds, user session tracking, behavior analysis and event scoring to detect and track credential use in all parts of the attack chain and prioritize responses

§ Exabeam was built by industry veterans from Splunk, Imperva and Sumo Logic

$14.2M

§ Easy Solutions is the only security vendor focused on the comprehensive detection and prevention of electronic fraud across all devices, channels and clouds. It’s products range from fraud intelligence and secure browsing to multi-factor authentication and transaction anomaly detection

§ Reported revenue growth of 187% in 2014 and is projecting 123% growth in 2015

NA

§ Bayshore Networks is a leader in the Industrial Internet of Things (IoT) security market. It enables industrial enterprises to secure IoT and OT data and transactions in manufacturing operations, robotics automation and M2M communications

§ Bayshore’s customers include Fortune 100 industrial and enterprise leaders who use Bayshore’s cloud-based solution for operational and safety policy execution, Layer 7 filtering, data protection/data loss prevention and high-value IP protection

$2.1M

§ SnoopWall’s anti-spyware/anti-malware “counterveillance” patent-pending software detects and blocks remote control, spying and eavesdropping on computers, tablets and smartphones and eliminates data leakage

§ “Mobile device security will become the top requirement this year (2015) for mobile banks, retailers and wallets as they move all their transactions into our space,” says Gary Miliefsky, SnoopWall’s CEO

Source: Momentum Partners, Crunchbase.

$10.0M

Security Sector Is Dynamic and Vast Covering The Security Sector Is Challenging And We Have Enjoyed Covering It For Over 12 Years.

7

Secure Web Gateway

Threat Intelligence

Big Data Analytics

Identity & Access Management

Infrastructure Security Endpoint Security Application Security

Cyber Security Mobile Security Security Information & Event Management

Cloud Security

Endpoint Protection & Anti-Virus

Secure Email Gateway

Endpoint Detection & Response

Web Application Firewall

Application Security Testing

Application Control

Intrusion Prevention Systems

Unified Threat Management

Network Firewall Network Monitoring

Source: Momentum Partners.

Robust Strategic Activity Since 2012��Monetization Through M&A And IPOs Has Been Virtuous And Venture Capital Investing Is Strong.

8

Selected Acquisition Activity Since 2012 (Date: Implied Enterprise Value / LTM Rev Multiple)

Equity (Date: $ Raised)

Selected VC Activity (Date: $ Raised / Pre-$ Valuation)

Source: Capital IQ, Crunchbase, TechCrunch. Momentum Partners maintains a proprietary Security M&A deal database.

1/14:$827M/8.1X

12/13:$48M: 2.5X 11/13:NA/NA 10/13:$324M/NA 9/13:$20M/NA

8/13:NA/NA 7/13:$2.2B/8.9X 7/13:$225M/NA 6/13:NA/NA 5/13:NA/NA

5/13:$971M/2.7X 5/13:$313M/5.8X 4/13:$17M/1.0X 3/13:NA/NA

12/12:NA/NA

12/12:$324M/NA

10/12:$172M/4.5X 9/12:$86M/7.1X 8/12:NA/NA

7/12:$150M/3.7X 4/12:$132M/NA 3/12:$1.2B/NA 3/12:NA/NA

3/14:$213M/NM 12/13:$403M/NA

3/12:NA/NA

9/14:$310M/NA 10/14:$233M/NA 9/14:$220M/6.7x

8/14:$890M/NA 1/14:$1.5B/NA

3/15:$2.4B/NA

11/14:$200M/NA

10/12:$350M/NA

4/15:$826M/3.8x

12/14:$710M/6.0x

6/15:$635M/NA 4/15:$1.9B/NA 4/15:$80M/NA

11/13:IPO:$86M

6/13:IPO:$128M

10/13:FO:$197M

9/13:IPO:$303M

10/12:FO:$302M 7/12:IPO:$300M

4/12:IPO:$138M 10/12:FO:$100M

9/12:IPO:$105M 4/12:IPO:$264M 7/12:FO:$382M

4/12:IPO:$94M

2/12:IPO:$128M

9/14:IPO:$86M

6/14:IPO:$100M

6/15:IPO:$125M

11/13:$10M/$71M

8/14:$25M/>$150M

9/13:$30M/$176M

12/13:$15M/$152M

9/14:$35M/>$230M

6/13:$15M/$105M 2/13:$18M/$65M

2/14:$20M/$78M

10/13:$40M/NA

4/14:$10M/NA 6/14: $40M/NA

12/13:$16M/NA

4/15:$33M/NA

12/14:$30M/NA 12/14:$22M/NA

7/14:$25M/NA

2/14:$26M/NA

8/13:$30M/$143M

3/15:$18M/$80M

4/15:$30M/NA

6/15:$25M/NA 6/15:$39M/NA 6/15:$84M/NA

4/15:$100M/$1B+

7/15:IPO:$103M

8/13:$900M/23X

Target Buyer Date Target Buyer Date Target Buyer Date

M&A Activity Has Accelerated��Selected Acquisitions In The Security Sector Since January 2014.

9

Selected Acquisition Activity (Date: Implied Enterprise Value / LTM Rev Multiple)

Transactions w/ Values

Transactions w/ No Value

Target Buyer Metrics Target Buyer Metrics Target Buyer Metrics

11/14: $200M/NA

6/15: $635M/NA 5/15: $60M/NA 4/15: $1.9B/NA

4/15: $80M/NA 4/15: $826M/3.8x

3/14: $213M/NA

1/14: $827M/8.1x

3/15: $2.4B/NA

9/14: $310M/NA

8/14: $890M/NA

1/14: $1.5B/NA

12/14: $710M/6.0x

9/14: $220M/6.7x

2/14: $80M/NA

6/15

4/15

3/15

10/14

7/14

5/14

5/14

3/14

2/14

5/15

4/15

2/15

7/14

6/14

5/14

5/14

2/14

1/14

4/15

3/15

12/14

7/14

6/14

5/14

4/14

2/14

1/14

Source: Capital IQ, TechCrunch. Momentum Partners maintains a proprietary Security M&A deal database.

VC Activity Has Also Accelerated Venture Capital Raises >$10 Million Have Substantially Risen Since January 2014.

10

Selected VC Activity

Date Company Amt Raised

($M) Date Company

Amt Raised ($M)


($M) Date Company

Amt Raised ($M)


($M)

6/15 39.0 6/15 21.0 6/15 84.0 6/15 25.0 6/15 30.0

5/15 25.0 4/15 100.0 4/15 30.0 4/15 33.0 3/15 52.0

3/15 20.0 3/15 18.0 3/15 30.0 2/15 15.0 2/15 19.0

2/15 35.0 2/15 12.0 2/15 18.0 2/15 12.0 12/14 30.0 30.0

12/14 25.0 25.0 12/14 30.0 12/14 40.2 12/14 17.0 12/14 22.0

11/14 50.0 11/14 10.5 11/14 30.0 10/14 11.0 9/14 80.0

9/14 12.0 9/14 15.0 9/14 35.0 9/14 10.0 8/14 21.0

8/14 150.0 8/14 25.0 7/14 25.0 7/14 25.1 7/14 40.0

7/14 20.0 6/14 40.0 6/14 12.0 6/14 10.0 6/14 10.0

5/14 25.0 5/14 14.1 5/14 90.0 5/14 42.0 5/14 35.0

4/14 12.0 4/14 10.7 3/14 12.0 3/14 20.0 2/14 40.0

2/14 20.0 2/14 13.7 2/14 25.5 2/14 16.5 2/14 38.3

2/14 25.6 1/14 16.5 1/14 10.0 1/14 15.0 1/14 18.0

Source: Capital IQ, Crunchbase.

4.8x

7.2x

37.9x

15.7x

5.8x 4.8x

27.4x

5.0x 4.1x

10.7x

7.1x

5.7x

11.2x

Mean: 9.2x

Median: 7.1x

Recent Security IPO Insights Security IPOs Have Priced Attractively Due To Increased Investor Confidence In The Sector.

11

Trading Multiple On The Day of Pricing For Each Security Sector IPO (Multiple: EV / LTM Revenue)

Source: Capital IQ.

VC Activity in Security

Financing Activity Reached New Heights in 2014 Security Startups Raised $8.3 Billion Across 924 Deals Since 2010.

13

Source: CB Insights.

Investment Deals And Dollars ($M) (Q1 2010 – Q2 2015)

$197 $212 $236 $141 $130 $219 $259

$242 $248 $264

$446

$269

$510

$261

$427 $515

$414

$973

$692

$432 $485

$704

27 30 23

28 30 31 35

24

40 47

33 36

51

42 49

59 58 68

61

53 52

47

Q1'

10

Q2'

10

Q3'

10

Q4'

10

Q1'

11

Q2'

11

Q3'

11

Q4'

11

Q1'

12

Q2'

12

Q3'

12

Q4'

12

Q1'

13

Q2'

13

Q3'

13

Q4'

13

Q1'

14

Q2'

14

Q3'

14

Q4'

14

Q1'

15

Q2'

15

Investments ($M) Deals

§  Over the last eight quarters investors have poured $4.6B into cybersecurity

§  On a quarterly basis, 2Q14 and 2Q15 were the strongest for investment, with value of deals reaching

over $700M

§  Deals hit a peak in 2Q14 and 3Q14 with 68 and 61 deals, respectively

Investment Deals And Dollars ($M) (2010 – 1H15)

$0.8 $0.8

$1.2

$1.7

$2.5

$1.2

108 120

156

201

240

99

2010 2011 2012 2013 2014 1H15

Investments ($B) Deals

§  Deals and dollars increased steadily, both

growing by more than 100% in 2014 compared

to 2010 levels

§  Funding in 2015 is roughly on pace to equal the

amount in 2014

1% 2% 3% 3% 3% 2% 14%

21% 23% 31%

20% 18%

20% 15% 14%

23%

23% 30%

21% 24% 16%

9%

15%

28% 17%

22%

11%

9%

2%

6% 5%

14%

20%

23%

28%

14% 22%

2% 11%

1% 11%

2%

2010 2011 2012 2013 2014 2015 YTD

Seed / Angel Series A Series B Series C Series D Series E+ Others

17% 27% 29% 32%

22% 25%

19%

31% 27% 24% 33% 25%

21%

12% 12% 17% 15% 20% 17%

8% 9% 4% 8% 12% 9% 9% 6% 5% 1% 3% 5%

8% 10% 6% 8% 4%

12% 7% 6% 11% 13% 10%

2010 2011 2012 2013 2014 2015 YTD

Seed / Angel Series A Series B Series C Series D Series E+ Others

Security Startup Financing By Series Share Of Series A Deal Volume And Series C Deal Value Increased The Most In 2014.

Source: CB Insights.

Security Financing by Deal Share: 2010 – Q2 2015

Security Financing by Dollar Share: 2010 – Q2 2015

§  Early-stage deals (Seed/Angel and Series A) have accounted for approximately

55% of the deal flow since 2011

§  Mid-stage deals (Series B and C) have accounted for approximately 32% of

deals in 1H15, slightly up from approximately 20% in 2011 – 2014

§  Late-stage deal share (Series D and E+) has steadily been declining, dropping

to approximately 10% in 2014 from 17% in 2011

§  Early-stage dollar share (Seed/Angel and Series A) has been pretty variable,

fluctuating from 15% in 2010 and peaking at 34% in 2013

§  Mid-stage deal share (Series B and C) had an uncharacteristically large share

of funding dollars in 2015, at 58%

§  Late stage deal share (Series D and E+) was weak in 1H 2015, at only 20%

14

$550 $282

$187 $155 $143 $143

$123 $115 $114 $109 $100

19 17

16

14 14 13

10 9

8 7

5

Security Startups And Investors List Of Most Well-Funded Startups And Most Active VC Investors.

Source: CB Insights, Crunchbase.

Most Well-Funded Security Startups ($M) Most Active Investors in Security

§  Good Technology tops the list of most well-funded startups, having raised more

than $550M over its life

§  Lookout managed to take the second spot after their $150M financing in August

2014

§  Cumulatively, the most well-funded startups have raised approximately $2.0B

§  Among investors, Intel Capital is the most active investor having invested in

19 companies since 2010

– Bessemer Venture and Kleiner Perkins followed with 17 and 16

investments each, respectively

13

Investment Date

Selected Investor(s) Company Business Description Amount

Raised ($M)

30-Jun-15 Intel Capital, QuestMark Partners, Silver Lake Partners, Foundation Capital

Venafi is a cyber security company, provides enterprise key and certificate management security solutions.

30-Jun-15 Bessemer Venture Partners, Correlation Ventures, IDEA Fund Partners, Techstars

Distil Networks provides web security service, offering public and private internet security from virus and automated computer programs which attacks websites.

25-Jun-15 Insight Venture Partners CheckMarx.com develops software solutions that are used to identify security vulnerabilities in Web and mobile applications.

23-Jun-15 New Enterprise Associates, Sigma Prime Ventures

Barkly uses high-performance local analytics and a unique design to stop attacks in the moment while preventing tampering from users and attackers.

8-Jun-15 Engineering Capital, General Catalyst, Osage University Partners, Sutter Hill Ventures

Menlo Security is a stealth cyber security company that develops security solutions eliminating the threat of advanced malware.

2-Jun-15 Alcatel-Lucent, Fairhaven Capital, Goldman Sachs, Siemens Ventures, Ten Eleven

CounterTack provides real-time endpoint threat detection and response solutions to enterprises and government organizations.

1-Jun-15 Foundation Capital, Matrix Partners, Sapphire Ventures, Trinity Ventures, Zouk Capital

Cyphort develops cloud services, software, and appliance-based solutions to protect enterprises against the newest cyber threats.

28-May-15 Excel Venture Management, Flare Capital, Heritage Group, HLM Venture Partners, NVP

ClearDATA offers security, privacy, and compliance services to the hospitals, physician practices, electronic medical record software, and healthcare markets.

5-May-15 Spark Capital, CRV, Lockheed Martin Cybereason delivers a technology platform that automatically uncovers malicious operations, reconstructing them as a clear image of a cyberattack in context.

15-Apr-15 Index Ventures, Intel Capital, Sutter Hill Ventures

Skyport Systems develops enterprise security and hyper-secured infrastructure solutions for critical IT and corporate assets.

14-Apr-15 BDS Venture Fund, HP Ventures, Index Ventures, Sequoia Capital, Rembrandt

Adallom is a cloud access security broker which delivers visibility, governance and protection for cloud applications.

14-Apr-15 Accel Partners, Andreessen Horowitz, BlackRock, General Catalyst, Formation 8

llumio provides cloud solutions, specializing in virtualization, networking, and security hailing services.

VC Activity Has Accelerated Venture Capital Raises >$10 Million Have Substantially Risen Since January 2014.��

16 Source: Capital IQ, Crunchbase.

39.0

21.0

84.0

12.5

25.0

15.0

30.0

25.0

25.0

30.0

100.0

30.0

Investment Date


Raised ($M)

8-Apr-15 Venrock, Index Ventures, New Enterprise Associates

Niara's solution blends diverse data sources, sophisticated analytics and forensics to discover compromised users, provide insight into malicious insiders.

1-Apr-15 Cisco, Intel, EPIC Ventures, Trident Capital, Vanedge Capital, Vmware, AITV, Fortinet

HyTrust, a cloud security automation company, provides administrative control, auditing, & data security for private, hybrid, and public clouds.

31-Mar-15 Andreessen Horowitz Tanium provides security and systems management solutions to allow real-time data collection.

24-Mar-15 Neuberger Berman Group, Alsop Louie Partners, Peninsula Ventures

Lookingglass Cyber Solutions develops cyber threat intelligence monitoring and management platforms.

17-Mar-15 Invoke Capital, Hoxton Ventures, Talis Capital Darktrace, a cyber security company, offers intelligence-led behavioral cyber defense solutions for cyber-attack vectors.

5-Mar-15 Mayfield Fund, Pelion Venture Partners, Third Point Ventures Elastica provides cloud security solutions for businesses and their employees.

25-Feb-15 Wing Venture Capital, Norwest Venture Partners Dtex Systems develops and provides secure user activity solutions.

25-Feb-15 Rogers Venture Partners, Blue Sky Capital SecureKey develops platform-as-a-service based hardware and software solutions for chip-based identity and payment technologies.

19-Feb-15 Institutional Venture Partners, Andreessen Horowitz, Felicis Ventures, Redpoint Ventures Pindrop Security provides caller-ID products to detect, report, and mitigate phone fraud.

18-Feb-15 Sierra Ventures, Samsung Ventures, Telstra Ventures, Lazarus Israel Opportunities Fund Zimperium, a mobile cyber security company, develops Mobile Intrusion Prevention System.

13-Feb-15 ONSET Ventures, Voyager Capital, Presidio Ventures, LDV Partners

Vidder mitigates network-based attacks by making servers invisible to everyone except authorized users.

10-Feb-15 Alcatel Lucent, Bessemer Venture Partners, Cisco Investments, Innovation Endeavors

Team 8 is an incubator for cyber-security firms with specialty in defending against targeted, human-driven cyber-attacks


17

20.0

33.0

52.0

20.0

18.0

30.0

15.0

19.0

35.0

12.0

12.0

18.0


Investment Date


Raised ($M)

31-Dec-14 Bessemer Venture Partners iSight Partners provides cyber threat intelligence solutions to public sector and commercial entities in the United States.

19-Dec-14 KPCB, Google Ventures, Greylock Partners, GGV Capital, Icon Ventures

Synack provides a cloud-based platform that enables customer data integrity, privacy, and confidentiality.

17-Dec-14 Technology Crossover Ventures, Bain Capital Ventures

Rapid7 provides vulnerability management and security data and analytic software solutions and services.

10-Dec-14 KPCB, MeriTech Capital Partners, Icon Ventures, Google Ventures, TechOperators Ionic Security offers a unified data and mobility security platform.

9-Dec-14 Grotech Ventures, Khosla Ventures, Citi Ventures DB Networks provides behavioral analysis solutions for intrusion detection and database security.

4-Dec-14 Palladin Capital, Google Ventures, IVP, General Catalyst Partners

ThreatStream’s Optic platform is a security intelligence solution that aggregates millions of threat indicators into existing security systems.

2-Dec-14 Baird Venture Partners, Jump Capital, Math Venture Partners

NowSecure develops and provides mobile security solutions for the financial, healthcare, and governmental institutions.

19-Nov-14 T-Venture, Delta Partners, Andreessen Horowitz, Transamerica Ventures CipherCloud provides cloud information protection solutions.

18-Nov-14 Osage Partners, General Catalyst Partners Menlo Security, a stealth cyber security company, develops a security solution that eliminates the threat of advanced malware.

18-Nov-14 Battery Ventures, Amplify Partners, Mike Kail Veradocs, a data-security company, secures and shares digital information across platforms and devices.

17-Nov-14 IPV Capital, ANT Financial V-Key provides mobile application threat research, protection, and intelligence solutions.

7-Nov-14 Bessemer Venture Partners, Columbia Capital, KPCB, Paladin Capital, Top Tier

Endgame provides security intelligence and analytics solutions for real-time visibility and actionable insight across their digital domains.

22-Oct-14 Benhamou Global Ventures, Javelin Venture Partners, Lakewood & Company Spikes Security provides browser-based security software solutions to businesses.


18

30.0

25.0

30.0

40.2

17.0

22.0

12.5

50.0

10.5

14.0

12.0

30.0

11.0


Investment Date


Raised ($M)

30-Sep-14 Draper Fisher Jurvetson, MeriTech Capital Partners

Good Technology Corporation provides secure mobility solutions for enterprises and governments worldwide.

22-Sep-14 Benchmark Capital, True Ventures, Radar Partners, Google Ventures

Duo Security provides two-factor authentication as a service to prevent account takeover and data theft.

16-Sep-14 Pelion Venture Partners, Third Point Ventures Krimmeni Technologies manufactures, markets, and licenses data security systems for device manufacturers and content providers.

12-Sep-14 Alloy Ventures, Battery Ventures, Scale Venture Partners, First Round Capital Agari Data provides email security solutions.

11-Sep-14 DFJ, KKR, Sapphire Ventures, Sapphire Ventures, Volition Capital, Ten Eleven Ping Identity Corporation provides cloud identity security and management solutions.

10-Sep-14 Battery Ventures, Glilot Capital PartnersLight Cyber develops solutions for identifying and preventing cyber-attacks and advanced persistent threats.

27-Aug-14 Wellington Management, .406 Ventures, Atlas Venture

Veracode offers a cloud-based application security platform for managing enterprise-wide governance programs

20-Aug-14 Citi Ventures, Columbus Nova Technology Partners, Work-Bench, Draper Nexus

vArmour Networks provides software-defined security solutions for virtualized data centers and government cloud operators.

18-Aug-14 Battery Ventures, 83North GuardiCore provides network security solutions for software-defined data centers.

13-Aug-14 Accel, Goldman Sachs, Index Ventures, T.Rowe Price, A16, Khosla, Wellington

Lookout develops and delivers cloud-based consumer mobile device security applications for iPhones and iPads.

8-Aug-14 Sequoia Capital, Tenaya Capital, Nexus Venture Partners

Druva Software provides data protection and governance solution for public and private clouds in an enterprise.

31-Jul-14 New Enterprise Associates, Norwest Venture Partners, SingTel Ventures

Bitglass provides security solutions that automatically segments, tracks, and secures businesses’ sensitive data across cloud and mobile.

29-Jul-14 Jerusalem Venture Partners Theta Ray offers malware detection and prevention solutions for critical infrastructure, communication systems, and financial systems.


19

80.0

12.0

11.7

15.0

35.0

10.0

40.0

21.0

11.0

150.0

25.0

25.0

10.0


Investment Date


Raised ($M)

25-Jul-14 Accel Partners, Intel Capital, Khosla Ventures, Juniper, AME Ventures, IA Ventures

Vectra Networks’ X-series platform uses next-gen compute architecture and combines data analytics and machine learning to detect attacks.

11-Jul-14 Riverwood Capital, Adams Street Partners, Access Venture Partners

LogRhythm provides log management and security information and event management solutions.

8-Jul-14 Index Ventures, Emergence Capital Partners, Greylock Partners, AME Ventures, Winklevoss Xapo develops and delivers online and offline security solutions for Bitcoin, a digital currency.

1-Jul-14 Frontier Capital InteliSecure provides a portfolio of information and network security services to help organizations protect their most critical assets.

19-Jun-14 Sequoia Capital, Salesforce Ventures, Greylock Partners

Skyhigh Networks enables companies to adopt cloud services with appropriate security, compliance and governance.

16-Jun-14 Redpoint Ventures, The Founders Fund, Bridgescale Partners, Radar Partners

BitGo operates a Bitcoin security platform that offers multi-signature security-as-a-service solutions.

10-Jun-14 Norwest Venture Partners, Aspect Ventures, Shlomo Kramer

Exabeam offers machine-learning technology that focuses on cyber attacker behavior to detect modern cyber attacks.

2-Jun-14 Blumberg Capital, Intel Capital, Swarth Group Fortscale Security develops data security systems which analyzes information and tracks patterns of potential security threats.

29-May-14 Summit Partners, Battery Ventures RiskIQ provides a software-as-a-service product that eliminates online and mobile threats.

27-May-14 CrossLink Capital, Trinity Ventures, Paladin Capital, Arsenal Venture ProtectWise offers cloud-based network security services.

23-May-14 Andreessen Horowitz Tanium provides security and systems management solutions to allow real-time data collection to enterprises and Fortune 500 customers.

16-May-14 Samsung Venture, Fortinet, DoCoMo Capital, Accel, Mayfield, Sigma West, Northgate

Centrify Corporation provides unified identity management across data center, cloud, and mobile.


20

25.1

40.0

20.0

14.3

40.0

12.0

10.0

10.0

25.0

14.1

90.0

42.0


Investment Date


Raised ($M)

15-May-14 Glynn Capital, Mohr Davidow, Greylock, Sequoia Capital, Cisco, Lumia, Sutter Hill

OpenDNS operates as a security company that provides Internet security and domain name system services to secure the networks.

23-Apr-14 Accel Partners, Tiger Global, Westly Group, Granite Hill Capital, UpWest, Data Collective

Sentinel Labs provides monitoring technology to protect workstations and mobile phones from threats.

14-Apr-14 New Enterprise Associates, Core Capital Partners, Genacast Ventures, Enrique Salem

ZeroFOX provides real-time social threat analytics, intelligence, and advanced security protection via its cloud-based cyber platform.

27-Mar-14 Khosla Ventures, IA Ventures, AME Cloud Ventures, Accel, Juniper, Intel Capital

Vectra Networks’ X-series platform uses next-gen compute architecture and combines data analytics and machine learning to detect attacks.

19-Mar-14 General Electric Pension Trust, Brookline Venture Partners, Fairhaven Capital

Digital Guardian provides data security solutions to protect data from insider and outsider threats.

11-Mar-14 August Capital, Adams Street Partners, U.S. Venture Partners, USVP, Tenaya, CM Capital

ThreatMetrix provides context-based business security and fraud prevention solutions for businesses in various industries worldwide.

6-Mar-14 Allied Minds Optio Labs develops transformational mobile security technologies for the federal and corporate enterprise.

21-Feb-14 KPCB, Allegis Capital, Norwest, Venrock, Google Ventures, Sierra Ventures

Shape Security develops web defense products to protect e-commerce and social network websites.

20-Feb-14 Blackstone Group, Khosla Ventures, Fairhaven Capital Cylance provides enterprise, critical infrastructure and embedded cyber security solutions.

20-Feb-14 Paladin Capital Group, Yaletown Venture Partners, Rho Canada Ventures

Shadow Networks’ solutions detect and mitigate the large number of APTs on enterprise and government networks.

13-Feb-14 Benchmark Capital, MeriTech Capital Partners, Shasta Ventures, Tenaya Capital

CloudPassage provides server security products for public and hybrid cloud hosting environments.

13-Feb-14 ONSET Ventures, DCM Data Systems, Lenovo Group Nok Nok Labs develops products and services for online security and authentication.


21

35.0

12.0

10.7

17.8

12.0

20.0

10.0

40.0

20.0

13.7

25.5

16.5


Investment Date


Raised ($M)

10-Feb-14 Atlas Venture, Highland Capital, KPCB, Sequoia Capital, .406 Ventures, Blackstone

Bit9 provides endpoint threat detection, response, and prevention solutions to detect and stop cyber threats.

5-Feb-14 KPCB, Icon Ventures, TechOperators, Google Ventures, ff Venture, BLH Venture Partners Ionic Security offers a unified data and mobility security platform.

27-Jan-14 Easton Capital, OrbiMed Advisors, Shasta Ventures, TELUS Ventures, New Leaf Venture

TigerText provides security software for text messaging for physicians to use on their mobile devices.

23-Jan-14 Bessemer Venture Partners, Ascent Venture Partners, Cedar Fund, Salesforce CloudLock provides cloud data security solutions.

21-Jan-14 Accel Partners, Innovation Endeavors, Glilot Capital Partners

Aorato develops a technology that provides protection to enterprise resources from advanced cyber attacks.

20-Jan-14 Tenaya Capital, Andreessen Horowitz, SV Angel, QueensBridge Venture Partners Bluebox Security operates as a stealth startup tackling enterprise mobile security company.


22

38.3

25.6

21.0

16.5

10.0

18.0


M&A Activity in Security

Security M&A Activity: Deal Volume and Exit Multiples Security M&A Activity Remains Robust.

Source: 451 Research.

Security M&A Volume By Year (# Deals) Median Security EV/Revenue Multiples

5.5x 5.0x 4.9x

4.0x

2013 2014 YTD 7/14 YTD 7/15

107 101 88

100

136

103

2010 2011 2012 2013 2014 YTD 7/15

§  2014 witnessed tremendous M&A activity in Security, recording 136

transactions, a 36% increase over 2013

§  2015 is off to a record start, with 103 transactions through July 29, totaling

$9.8 Billion

§  Some of the more active security sectors in 2015 include physical security,

network security, anti-malware and identity and access management

§  The median Security exit multiple has declined over 25% since 2013, as

buyers continue to become more disciplined around valuation

§  The median Security exit multiple in YTD 2015 is 18% lower than the

median exit multiple in YTD 2014 (4.0x vs 4.9x)

24

Top Security Investors and Acquirers Intel Capital Made The Most Exits Since 2010, While Intel/McAfee Tops The Acquirer List.

Source: CB Insights, Momentum Partners.

Top Security Investors – based on # of exits Top Security Acquirers

§  Intel Capital saw the most exits within Security since 2010 with more ��

than 10

§  11 investors had 5 or more exits since 2010

§  Accel grabbed the second spot with exits including Imperva and Arcot

Systems

§  The top acquirer in the security space was Intel/McAfee with a acquisitions

that included Stonesoft and ValidEdge

§  Google was second, which typically acquired unfunded or early stage

companies including Impermium and Divide

§  Symantec rounded out the top three, and was the only other acquirer with

more than 5 security-related acquisitions since 2010

25

Top Security Acquirers Since 2010 Acquisition Activity Has Remained Robust Across All Sectors Within Security.

26

Acquirer Date Target Enterprise Value ($M)

EV / TTM Revenue Business Description

1-Dec-14 PasswordBox − − PasswordBox develops an application that allows users to store, create, retrieve, and share passwords and other personal information.

30-Sep-13 Sensory Networks 20.0 − Sensory Networks develops software pattern matching and content processing acceleration solutions.

6-May-13 Stonesoft 313.0 5.8x Stonesoft Corporation delivers software-based information security solutions to secure information flow and enhance security management.

26-Feb-13 ValidEdge − − ValidEdge, a malware-analysis solutions company, provides solutions to fight malware-based cyber attacks.

12-Feb-12 Insightix − − Insightix provides security intelligence and control solutions.

4-Oct-11 NitroSecurity − − NitroSecurity provides security information and event management solutions.

23-Mar-11 Sentrigo − − Sentrigo, developer of database security software, offers database activity monitoring and intrusion prevention solutions.

8-Feb-11 InternetSafety.com 10.7 − InternetSafety.com develops software and provides Internet safety solutions.

11-Jan-11 Nordic Edge − − Nordic Edge provides identity and access management solutions.

19-Aug-10 McAfee 6,907.7 3.4x McAfee offers antivirus, Internet security, mobile and desktop security, and malware and virus protection software solutions for its consumers.

25-May-10 Trust Digital 32.5 − Trust Digital is a provider of mobile management and security software targeted at enterprises.

Source: Capital IQ.


27



19-May-14 Divide 120.0 − Divide designs and develops enterprise mobile solutions to create a secure workspace on employee devices.

21-Feb-14 Spider.io − − Spider.io designs products to weed out fraudulent clicks around online ads and detect attacks originating from PCs infected by malware.

16-Feb-14 SlickLogin − − SlickLogin allows users to access their secured accounts by utilizing smartphones.

15-Jan-14 Impermium − − Impermium provides subscription-based social content cleaning services for Web sites and social networks.

7-Sep-12 VirusTotal − − VirusTotal provides online virus scanning services to end users, and the antivirus and security industry.

1-Jun-12 Interactive Security − − Interactive Security provides online trust seals for small businesses.

1-Mar-11 Zynamics − − Zynamics provides program analysis tools and focuses on engineering community solutions for information security and malware analysis.

22-Jul-11 Pittsburgh Pattern Recognition − − Pittsburgh Pattern Recognition develops and delivers biometrics solutions.

12-Jan-15 Narus − − Narus provides cybersecurity data analytics solutions for enterprises, carriers, and governments worldwide.

28-May-14 NitroDesk − − NitroDesk provides TouchDown, an ActiveSync email solution for securing corporate email on mobile devices.

18-Jul-13 PasswordBank 25.0 − PasswordBank develops and markets a suite of products which solves the problem of user identification and access management.

27-Jun-12 Safestone Technologies − − Safestone Technologies provides software solutions to manage security and compliance in complex operating environments.

9-Jan-12 LiveOffice 115.0 − LiveOffice provides information archiving solutions for various companies in the United States and internationally.

29-Apr-10 PGP Corporation 306.0 4.1x PGP Corporation provides email and data encryption software solutions for enterprises, businesses, and governments.

12-Jan-10 Gideon Technologies − − Gideon provides IT risk management software that helps organizations to visualize enterprise IT risks and automate information security activities.

Source: Capital IQ.


28



19-Mar-14 Cenzic − − Cenzic provides an application security platform to assess cloud, mobile, and Web vulnerabilities.

11-Nov-13 Application Security − − Application Security develops and provides data security, risk, and compliance solutions for organization worldwide.

3-Apr-13 SecureConnect − − SecureConnect provides Internet security and payment card industry (PCI) compliance services to businesses.

6-Mar-12 M86 Security − − M86 Security provides Internet and Email security solutions.

22-Jun-10 Breach Security − − Breach Security designs and develops Web application integrity and security solutions that protect Web-based information.

3-Mar-10 Intellitactics 7.1 0.5x Intellitactics develops and markets enterprise security management software solutions to corporate and institutional clients.

12-Jan-10 BitArmor Systems − − BitArmor Systems develops and provides information-centric data security software.

30-Jun-15 OpenDNS 635.0 − OpenDNS provides Internet security and domain name system services that deliver automated protection against attacks/Web threats on various devices, including phones, tablets, laptops and gaming consoles.

10-Dec-14 Neohapsis − − Neohapsis offers application & cloud security, compliance, IT risk & security strategy, mobile device security, and network & endpoint security services.

21-May-14 ThreatGrid − − ThreatGrid owns and operates an online malware threat intelligence platform, enabling organizations to identify and analyze malicious software.

23-Jul-13 Sourcefire 2,193.6 8.9x Sourcefire provides intelligent cybersecurity technologies worldwide.

29-Jan-13 Cognitive Security − − Cognitive Security provides network security solutions for enterprise and small to medium-size business markets.

13-Jul-12 Virtuata − − Virtuata designs and develops security software for virtual machines.

26-Jan-11 Pari Networks − − Pari Networks provides network security risk and policy compliance management solutions.

Source: Capital IQ.


29



11-Aug-14 Lighthouse Security − − Lighthouse Security develops identity and access management (IAM) solutions.

15-Aug-13 Trusteer 900.0 22.5x Trusteer provides cybersecurity solutions that protect organizations against financial fraud & data breaches.

4-Oct-11 Q1 Labs − − Q1 Labs provides security intelligence products.

31-Aug-11 i2 Limited − − i2 develops visual investigative analysis software to deter, prevent, predict, and disrupt threats worldwide.

1-Jul-10 BigFix − − BigFix provides a unified management platform that automates and streamlines systems and security management for endpoints and servers.

20-Jan-10 National Interest Security − − National Interest Security provides info technology, information management, and consulting solutions.

15-Apr-15 Cloudlink − − CloudLink provides the encryption foundation for securing critical data across heterogeneous infrastructures.

8-Jul-13 Aveska − − Aveksa provides enterprise access governance automation solutions.

30-Oct-12 Silver Tail Systems 350.0 −

Silver Tail Systems develops and provides predictive analytics for detection and prevention of fraud and abuse for Websites worldwide.

4-Jan-10 Archer Technologies − − Archer Technologies delivers enterprise risk and compliance solutions.

2-May-15 Emerging Threats 40.0 − Emerging Threats provides open-source network-based malware threat detection and threat intelligence.

20-May-14 NetCitadel 22.8 − NetCitadel is a threat management platform providing security solutions and alerts to data-driven organizations.

9-Aug-13 Armorize Tech. 25.0 − Armorize Technologies delivers end-to-end security solutions safeguarding enterprises from hackers seeking to exploit vulnerable Web applications.

6-May-14 nPulse Technologies 67.1 − nPulse provides sustained packet capture with big data security analytics for network and security operations.

2-Jan-14 Mandiant 826.5 8.1x Mandiant provides incident response and computer forensics solutions and services.

22-Jan-14 AirWatch 1,545.0 − AirWatch develops mobile security and enterprise mobility management solutions.

26-Aug-11 PacketMotion − − PacketMotion develops security investigations, alerting, and reporting solutions for enterprises to see user activity inside their networks.

Source: Capital IQ.

Notable Security M&A Transactions Security M&A Transactions With Disclosed Transaction Values.

30

Date Target Buyer Enterprise Value ($M) TTM Revenue ($M) EV / Revenue

06/30/15 OpenDNS Cisco 635.0 − −

06/09/15 Reflexion Networks Sophos 15.0 − −

06/08/15 IdMlogic CA 20.0 − −

05/27/15 ShieldArc Palo Alto Networks 18.0 − −

05/06/15 Privax AVG Technologies 60.0 − −

04/20/15 Websense Raytheon 1,900.0 − −

04/07/15 Trustwave Singtel 826.5 216.0 3.8x

04/02/15 Lacoon Mobile Security Check Point Software 80.0 − −

03/10/15 Blue Coat Systems Bain Capital 2,400.0 − −

03/02/15 Emerging Threats Proofpoint 40.0 − −

02/24/15 Optenet Allot Communications 38.0 − −

12/09/14 Tripwire Belden 710.0 118.5 6.0x

11/13/14 Aorato Microsoft 200.0 − −

10/31/14 WISEKey Garnero Group 138.3 6.2 22.2x

10/21/14 SilverSky Networks BAE Systems 232.5 − −

10/20/14 RightSignature Citrix 36.0 − −

10/01/14 Mobile Spaces Pulse Secure 100.0 − −

09/03/14 Location Labs AVG Technologies 220.0 33.0 6.7x

09/02/14 BeyondTrust Veritas Capital 310.0 − −

Source: Capital IQ. Momentum Partners maintains a proprietary Security M&A deal database.


31


09/02/14 SOFTPRO Kofax 34.7 13.3 2.6x

08/08/14 SafeNet Gemalto 890.0 − −

07/21/14 Retail Decisions ACI Worldwide 205.0 − −

07/07/14 CA Arcserve Data Protection Assets Marlin Equity Partners 170.0 − −

05/20/14 NetCitadel Proofpoint 22.8 − −

05/19/14 Divide Google 120.0 − −

05/06/14 nPulse Technologies FireEye 67.1 − −

04/24/14 DecTech Solutions GB Group 34.2 9.6 3.5x

04/23/14 docTrackr Intralinks 10.0 − −

03/31/14 Blancco Oy Regenersis 82.7 17.01 4.8x

03/24/14 Cyvera Palo Alto Networks 213.2 − −

02/10/14 Cyberoam Sophos 80.0 35.0 2.3x

02/06/14 Incapsula Imperva 40.5 − −

01/22/14 AirWatch Vmware 1,545.0 − −

01/06/14 Morta Security Palo Alto Networks 10.3 − −

01/02/14 MANDIANT FireEye 826.5 102.0 8.1x

12/09/13 QUMAS Accelrys 48.0 19.2 2.5x

12/02/13 Alaric NCR 78.4 − −

12/02/13 Prolexic Akamai 402.6 − −



32


10/01/13 41st Parameter Experian 324.0 − −

09/30/13 Sensory Networks Intel 20.0 − −

09/17/13 Versafe F5 Networks 87.7 − −

08/15/13 Trusteer IBM 900.0 40.0 22.5x

08/09/13 Armorize Technologies Proofpoint 25.0 − −

07/23/13 Sourcefire Cisco 2,193.6 247.4 8.9x

07/18/13 PasswordBank Symantec 24.9 − −

07/08/13 Aveksa EMC/RSA 225.0 − −

05/20/13 Websense Vista Equity Partners 971.1 359.4 2.7x

05/06/13 StoneSoft McAfee 312.9 53.7 5.8x

04/29/13 Arkoon Network Security Cassidian Cybersecurity 17.0 17.0 1.0x

12/05/12 Zenprise Citrix 324.2 − −

10/30/12 Silver Tail Systems EMC/RSA 350.0 − −

10/17/12 Motex Kyocera 171.5 38.3 4.5x

09/13/12 Sensage KEYW 85.5 12.1 7.1x

07/27/12 AuthenTec Apple 378.3 76.1 5.0x

07/02/12 BreakingPoint Systems Ixia 150.4 40.2 3.7x

06/20/12 Wavelink LANDesk Software 82.0 − −

04/23/12 Memento & Integrated Compliance FNIS 45.1 − −



33


04/03/12 LogLogic TIBCO 131.6 − −

03/13/12 SonicWALL Dell 1,200.0 − −

02/22/12 Mykonos Software Juniper Networks 82.6 − −

01/11/12 Compliance 360 SAI Global 42.3 − −

01/09/12 LiveOffice Symantec 115.0 − −

12/08/11 Blue Coat Systems Thoma Bravo 896.9 467.2 1.9x

06/23/11 TriGeo Network Security SolarWinds 35.5 − −

05/08/11 SCsquare Broadcom 40.0 − −

01/04/11 SecureWorks Dell 612.0 120.0 5.1x

Mean 344.0 97.2 6.2x

Median 117.5 40.0 4.8x


Security Public Trading Analysis

-‐30

-‐10

10

30

50

70

90

High Growth Security Tradi>onal Security Nasdaq S&P 500

Security Sector vs Benchmark Performance High Growth Security Companies Have Significantly Outperformed Benchmark Returns, While Traditional Security Has Underperformed.

35

Source: Capital IQ, market data as of August 4, 2015.

+66%

+23%

+14%+10%

3 months 6 months 12 months

High Growth 10.0% 35.1% 76.3%

Traditional (6.8%) 0.2% 7.8%

NASDAQ 1.8% 8.2% 16.5%

S&P 500 (1.0%) 2.5% 8.0%

2.1x 2.3x 2.4x

4.2x 4.3x 4.3x

5.8x

8.7x

Symantec F-Secure VDSI AVG Trend Micro Barracuda Sophos Check Point

Traditional Security (Current: EV / Revenue Multiples)

2.1x

7.8x 8.4x 9.0x

9.9x 10.9x

12.1x

13.8x

15.7x

18.6x

MobileIron Qualys Fortinet Rapid7 Imperva Proofpoint FireEye CyberArk Splunk Palo Alto Networks

Trading Multiples: High Growth & Traditional Valuation Multiples For High Growth & Traditional Security Companies.

Source: Capital IQ, market data as of August 4, 2015.

High Growth Security (Current: EV / LTM Revenue Multiples)

Median: 10.4x

35

Median: 4.3x

Current Trading Multiples vs. Growth Valuation Correlated Largely With Revenue Growth…As Well As Market Leadership.

36

Note: Size of the bubble indicates Market Cap. In USD; Market data as of August 4, 2015. MobileIron is considered high growth security firm given its expected revenue growth for the year 2015-16. Source: Capital IQ.

FireEye ��$6,927mn

Palo Alto Networks ��$15,519 mn

Fortinet $8,161 mn Barracuda��

$1,429mn

Proofpoint $2,566 mn

Imperva $1,991 mn

Splunk $8,562 mn

Qualys ��$1,317mn

Symantec $15,339 mn

Check Point ��$14,763 mn

Trend Micro ��$5,045 mn

AVG $1,489 mn

F-secure $485 mn

VDSI $743 mn MobileIron ��

$402 mn

CyberArk $1,823 mn

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

-15% -5% 5% 15% 25% 35% 45% 55%

EV /

Rev

enue

201

5E

2014-15E Revenue Growth

High Growth Security Traditional Security

R2 = 68.4%

Public Company Trading Analysis High Growth & Traditional Security.

37

Note: NM – Not Meaningful, NA – Not Available; market data as of August 4, 2015; * price performance from IPO price. Source: Capital IQ.

Company Name Stock Price LTM Price

Performance Market Cap

($M)

Cash & Short Term Investment

($M)

2014-15E Revenue Growth

2015E-16E Revenue Growth

EV / Revenue EV / EBITDA P / E

LTM CY2015 CY2016 LTM CY2015 CY2016 CY2015

High Growth Security Palo Alto Networks 185.50 131.2% 15,519 454 42.8% 31.6% 18.6x 14.5x 11.0x NM 73.0x 42.9x NM

Splunk 68.11 50.0% 8,562 414 36.7% 31.0% 15.7x 12.5x 9.5x NM NM NM NM

Fortinet 47.68 95.3% 8,161 481 30.7% 22.9% 8.4x 7.2x 5.9x 51.7x 43.8x 33.7x 91.9x

FireEye 43.45 27.0% 6,927 726 50.4% 37.5% 12.1x 10.0x 7.3x NM NM NM NM

Proofpoint 64.31 84.0% 2,566 402 31.8% 26.8% 10.9x 9.7x 7.6x NM NM NM NM

Imperva 65.07 141.9% 1,991 196 26.1% 21.6% 9.9x 8.5x 7.0x NM NM NM NM

CyberArk* 57.57 259.8% 1,823 163 36.5% 29.8% 13.8x 11.6x 8.9x 71.5x 69.3x 50.9x NM

Qualys 38.79 53.1% 1,317 84 23.8% 23.7% 7.8x 7.0x 5.7x 36.6x 25.1x 20.2x 70.9x

Rapid7* 19.80 23.8% 767 33 NA NA 9.0x NA NA NM NA NA NA

MobileIron 5.16 (41.2%) 402 46 10.2% 18.9% 2.1x 2.0x 1.7x NM NM NM NM

Mean 32.1% 27.1% 10.8x 9.2x 7.2x 53.3x 52.8x 36.9x 81.4x Median 31.8% 26.8% 10.4x 9.7x 7.3x 51.7x 56.6x 38.3x 81.4x High 50.4% 37.5% 18.6x 14.5x 11.0x 71.5x 73.0x 50.9x 92.0x Low 23.8% 21.6% 7.8x 7.0x 5.7x 36.6x 25.1x 20.2x 70.9x

Traditional Security Symantec 22.42 (4.8%) 15,339 2,874 (6.1%) 3.3% 2.1x 2.2x 2.1x 6.4x 6.6x 6.1x 12.3x

Check Point Software 81.63 21.9% 14,763 216 8.8% 8.1% 8.7x 8.3x 7.7x 15.5x 14.6x 13.5x 20.3x

Trend Micro 37.15 24.4% 5,045 416 7.1% 3.5% 4.3x 4.1x 4.0x 12.3x 11.9x 11.5x 27.4x

Sophos* 3.99 12.8% 1,796 73 NA NA 5.8x NA NA 39.8x NA NA NA

AVG Technologies 28.77 64.4% 1,489 160 15.4% 15.9% 4.2x 3.7x 3.2x 11.9x 10.4x 9.0x 15.4x

Barracuda Networks 26.85 (6.5%) 1,429 156 17.2% 18.1% 4.3x 4.0x 3.4x 51.1x 14.2x 12.0x 77.2x

VDSI 18.8 32.1% 743 82 18.4% (1.2%) 2.4x 2.5x 2.5x 13.8x 10.3x 9.9x 15.2x

F-Secure 3.11 5.4% 485 26 (4.9%) 8.0% 2.3x 2.5x 2.3x 12.1x 12.9x 11.7x 24.7x

Mean 8.0% 8.0% 4.7x 3.9x 3.6x 20.4x 11.6x 10.5x 27.5x

Median 8.8% 8.0% 4.3x 3.7x 3.2x 13.1x 11.9x 11.5x 20.3x

High 18.5% 18.1% 8.7x 8.3x 7.7x 51.1x 14.6x 13.5x 77.2x

Low (6.1%) (1.2%) 2.1x 2.2x 2.1x 6.4x 6.6x 6.1x 12.3x

15

Advise. Network. Invest. Momentum Partners, LLC

340 Brannan Street | Suite 501

San Francisco, California 94107

Michael Tedesco Executive Chairman

[email protected]

Eric McAlpine Managing Partner

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Keith Skirbe Principal

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Dino Boukouris Principal

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