Security Software Maker eEye Doubles Funding

Orange County Business Journal, Jun 14-Jun 20, 2004 by Cziborr, Chris

Aliso Viejo-based eEye Digital Security's recent $15 million in venture capital funding doubles the network security company's total raised to $30 million.

The round, the company's fourth, was led by first-time investor Bessemer Venture Partners of Larchmont, N. Y

New York-based Insight Venture Partners, which led a previous round of funding for eEye, also took part.

The 6-year-old company plans to use the money "to accelerate growth and expand our product and portfolio," said Grant Johnson, eEye's senior vice president of marketing.

Company officials declined to say what eEye was valued at in the latest funding round, but said it was up from the prior round.

In 2002 eEye raised $8.5 million. The company raised $6.5 million in its first two rounds of funding from unnamed angel investors.

Company officials said they have no plans to do a public stock offering or raise more money in the near future.

Last year eEye brought in $12 million in sales, Johnson said. The company expects to hit $20 million this year, he said, driven by growth in demand for products and services that can find holes in software that could be exploited by hackers.

"We have been cash flow positive and have been growing revenue 100% each year for the past four years," Johnson said. "When software is made and there are flaws in the software, we can detect those flaws and provide remediation advice and fix the vulnerabilities."

One of eEye's most notable moments was in 2001 when the company discovered a flaw in Microsoft Corp.'s Windows 2000 server software that could allow a hacker to gain control of Web sites. Microsoft issued a patch as a result.

The company is one of a handful of network security software makers here, including Mission Viejo-based Foundstone Inc. and PivX Solutions LLC of Newport Beach.

In Orange County, eEye counts 90 workers. Another 30 people work out of offices in London, New York, Chicago, the Bay area, Miami, Washington, D.C. and Switzerland.

Clients include Citigroup Inc., Continental Airlines Inc., Dow Jones & Co., IBM Corp. and AT&T Wireless Services Inc.

"We have sold products in over 80 countries," Johnson said. "We get orders from the Web and all around the world-about a third of our sales are international."

Chief Executive Firas Bushnaq started eEye with Marc Maiffret, the company's "chief hacking officer," in 1998. Maiffret looks the part, sporting spiky colored hair.

A friend introduced the two and Maiffret started doing hacking-related security work for Bushnaq's eCompany Inc. in Aliso Viejo, a custom business software developer. From there, the pair started eEye.