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Sourcefire Sold to Israeli Company
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With $100,000 in angel funding, Sourcefire began selling a more polished version of Snort that came with service guarantees and help with installation. After Sourcefire landed some major clients it was able to raise $33.65 million in three rounds of venture funding. Its investors include Greylock Partners of San Mateo, Calif.; Sierra Ventures of Menlo Park, Calif.; and New Enterprise Associates of Baltimore.
Wayne Jackson, a seasoned technology entrepreneur, joined Sourcefire in 2002 to steer the company toward fast growth.
"When I first heard it I thought it was a crazy idea," said Jackson, the chief executive. "The notion of taking something that was otherwise free and commercializing it wasn't intuitive."
Licenses for Sourcefire's products, some of which have been developed on a proprietary basis, start around $4,000 and go as high as $120,000, depending on the complexity of the product.
Check Point's chief executive, Gil Shwed, said Sourcefire's technology will eventually be embedded in all its products. The Israeli firm's firewall systems work to block the same attacks that Sourcefire's software detects.
The market for computer security systems has boomed in recent years. But analysts caution that the market for firewalls is now largely saturated, forcing Check Point to branch into new lines of business. In 2004, Check Point earned $248.4 million, up only slightly from the $243.9 million profit it recorded the previous year.
"The firewall market isn't going anywhere," said William R. Becklean, an analyst with Oppenheimer & Co. The Sourcefire purchase is a way for Check Point "to try and maintain the growth of the company," Becklean said.
Some investors balked at the price of the acquisition, sending shares of Check Point down $2.20, to $21.50. Under the terms of the deal, which is expected to close in the first quarter of next year, Check Point will also assume Sourcefire's stock option plan. No layoffs are expected among Sourcefire's 150 employees.
