Palo Alto Networks is announcing today it has raised $27 million in a third round of funding for its firewall appliance business.
Lehman Brothers Venture Partners led the round while other investors included Globespan Capital Partners, Greylock Partners, and Sequoia Capital. The Sunnyvale, Calif.-based company will use the money to expand its sales, marketing and customer services functions in North America as well as extend its business into Europe and Asia.
The size of the round is large for a security company that is competing with some big rivals. But the company solves problems that the others don’t and it has some well-known backers. In security, a business built on trust, the clout of the backers and the company’s newly appointed CEO, who has a wealth of experience in security technology, should help Palo Alto Networks garner more momentum.
The firewalls of the past have been designed to stop threats coming in from emails and web sites. But as employees adopt new web-based services — instant messaging, Skype, and Salesforce.com — they open up the networks to new threats. That’s where Palo Alto Networks’ firewall appliances come in, said Lane Bess, chief executive of Palo Alto Networks.
“We can monitor what the employees are using on the web,” he said.
Instead of offering generic firewall protection, Palo Alto Networks’ PA-4000 family of products can set corporate firewall protocols on more granular levels so that each user has a distinct set of permissions on a network. As a tool, it gives network administrators more control of their networks by letting them see all applications on a network.
The hardware devices have enough speed to filter the traffic without slowing down a network. They range in price from $12,000 to $80,000. It lets IT managers detect which users are installing unauthorized or personal applications on their work machines. Competing products often don’t give detailed information that can help IT managers make quick decisions about what users are allowed or not allowed to do.
Bess joined the company at the end of June. He has 25 years of experience in sales and marketing roles and was mostly recently executive vice president for global sales at antivirus software vendor Trend Micro. During his years there, he helped the company cross a billion dollars in sales. Palo Alto Networks was was founded in 2005 and has raised about $55 million to date.
Competitors include Juniper Networks, CheckPoint Security Technologies and Cisco. These incumbents are well established in corporate networks. But Bess said that he doesn’t ask CIOs to rip out firewalls that they’ve invested millions of dollars into. The PA-4000 family sits alongside existing firewalls and provides added protection without requiring a company to build an entirely new network.
