Nozomi Networks Raises $100 Million in Series E

March 13, 2024

Cybersecurity company Nozomi Networks has secured $100 million in a Series E funding round, making it the latest company focusing on industrial technology to successfully raise significant investment in recent months.

Nozomi, which brought its first product to market in November 2013, develops technology designed to secure the internet-connected devices and systems used to support the day-to-day running of critical infrastructure such as power grids, oil and gas facilities, manufacturing plants and water utilities.

These systems, known collectively as operational technology, have typically been managed separately from information-technology networks, which comprise software such as email, human resources, sales and accounting platforms. That has changed, said Edgard Capdevielle, president and chief executive of Nozomi, as companies have digitized their work environments in recent years and the threats to these systems have grown.

“Folks are realizing that as these networks move to the purview of the chief information security officer, which is a trend that is happening aggressively after Colonial Pipeline, they need to be protected,” he said, referring to a ransomware attack on the U.S. pipeline operator in 2021, which forced the closure of the largest fuel artery on the East Coast for six days and prompted significant government action on cybersecurity.

Manufacturers Mitsubishi Electric and Schneider Electric participated in the round. Previous investors in Nozomi, which has raised around $250 million to date, include manufacturing companies Honeywell, Johnson Controls and Keysight Technologies, as well as the venture arm of the U.S. Central Intelligence Agency, In-Q-Tel.

Capdevielle said the funding will be used for product development and expanding the company’s global sales reach. During its Series D round in 2021, the company had described the funding as pre-IPO, and Capdevielle said that is still an ambition for the company, albeit secondary to growth.

“I think after this round, we would have the optionality of IPO. But we don’t see [an] IPO as an end goal, we see it as a milestone and as yet another option for the company to source money. But our ultimate goal is category domination,” he said.

Nozomi is the latest operational-technology specialist to secure significant funding over the past year. In September, industrial cybersecurity company Dragos completed a $74 million Series D extension round, and last week, cyber defense company Claroty raised $100 million in strategic financing.

Industrial cybersecurity has become a hot-button topic since Colonial’s attack, but warnings from the U.S. government and its allies about threats to critical infrastructure have escalated of late. Senior law enforcement and intelligence officials, including the director of the Federal Bureau of Investigation, Christopher Wray, have said that attempts to break into networks by nation-states such as China are at a record high. Beijing has consistently denied involvement in cyberattacks.

Ransomware groups, which have gone after softer targets in IT networks historically, are also intensifying their strikes against industrial control systems, programmable logic controllers and other platforms that govern the day-to-day operations of heavy machinery used in vital industries, such as wastewater management. 

“We think this trend towards not just connected devices but cyber-physical systems is creating more of a challenge than any of us are comfortable with,” said Scott Westlake, vice president of strategic innovation at Keysight, which is both an investor in and a customer of Nozomi.