Guardian Analytics raises $11M to ferret out cyber fraud

Guardian Analytics is in the increasingly necessary business of helping banks stop cybercrime. And since cybercrime keeps growing, Guardian has raised another $11 million in venture funding.

The company’s Guardian Analytics FraudMAP captures data about the typical habits of online bank users so that it can predict their behavior and detect anomalies that may be attempts by cybercriminals to break into bank accounts. The funding reflects a spate of interest in security technology, which is enjoying a resurgence thanks to the spiraling security problems both in online and mobile markets.

Los Altos, Calif.-based Guardian plans to use the money to accelerate sales and build up its product development for anomaly detection and transaction monitoring. Attempts to lock the front door for banks online have failed, said Terry Austin (pictured top), chief executive of Guardian. That’s leading to lawsuits, thefts, new legislation and new regulations. Guardian works with 15 different financial companies across retail and business banking.

In the fourth round of funding, the company added Split Rock Partners to its investors. which include Foundation Capital and Sutter Hill Ventures. Jim Simons, managing director of Split Rock Partners, is joining Guardian’s board.

In 2010, Guardian expanded its customer base by 2000 percent and saw 134 percent growth in the second half compared to the first half. Guardian was founded in 2005 and has 29 employees. Rivals include RSA and Actimize. While rivals focus on protecting a user’s machine and use several layers of authentication, cybercriminals have proven they can beat these security layers. Too often, financial institutions only learn about fraud when customers complain about losses. Guardian Analytics has self-learning tools — a Risk Engine and a Risk Application — that determine if an individual’s behavior is inconsistent with expected behavior.

Guardian says FraudMAP catches fraud that others miss. The service is also affordable enough for regional and community banks. And it doesn’t take an army to implement it either. To date, the company has raised $27.25 million.