Sourcefire expects $15 million in venture capital

Sequoia Capital is lead investor in new funds for Md. Web security firm

January 27, 2004|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

Sourcefire Inc., the Columbia supplier of network security systems, is expected to announced today that it has raised $15 million in a third round of investment financing, led by Sequoia Capital.

Sequoia Capital is a Silicon Valley venture capital firm that has seeded such tech successes as Cisco Systems and Apple Computer.

Chief Technology Officer Martin Roesch founded Sourcefire three years ago in his Carroll County living room. He is best known in technology circles as the author of Snort, the most widely used network intrusion detection system in the world.

Sourcefire, which helps institutions protect their computer networks from attack, has grown from five employees to 85 around the world. Its $10 million in revenue in 2003 was a fivefold increase from 2002.

The privately held company last month launched a product called Real-time Network Awareness, which monitors networks for hackers, viruses and worms. It's already in use at more than 70 commercial, educational and government institutions.

"Sourcefire has proven its ability to serve real customers with real pain points writing real checks that equate to a sizable and growing opportunity," said Sameer Gandhi, a partner in Sequoia Capital. "We see, on average, about 20 new ideas per day and make only eight to 12 new investments per year. Sourcefire distinguished itself from day one through their remarkable progress, product vision and enormous market potential."

Besides Cisco and Apple, Sequoia Capital has provided start-up capital to Yahoo, Google, PayPal and Oracle. Companies financed by Sequoia Capital account for about one-tenth of the total value of the Nasdaq stock market.

"We're thrilled that they've selected us," said Tom McDonough, president and chief operating officer for Sourcefire. "With the money we've raised, we're going to increase our international focus, invest in more product development, and invest heavily in marketing. We're at a stage now where we've developed a fairly good brand without a lot of marketing, but we're going to double our efforts. We're also planning to invest more in sales."

Sourcefire also was named yesterday as a "Company to Watch," by Network Computing magazine in its "Survivor's Guide to 2004: Security."

Sourcefire's Real-time Network Awareness product allows managers to observe network traffic and analyze data quickly to find patterns of an attack on the system.

In its first round of financing in February 2001, Sourcefire raised $7.6 million. Two years later, the company raised $11 million in a second round.

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