Distil Networks, an Arlington-based cybersecurity start-up that has raised $44 million from venture capitalists since its founding in 2011, said Wednesday that it is buying ScrapeSentry, a Swedish competitor.
Chief executive Rami Essaid would not disclose the size of the cash-and-stock deal but said it was between $2 million and $10 million.
“We definitely made a big bet, but it seemed like it made a lot of sense,” Essaid said.
Essaid, a college dropout known around town for boisterous, animated investor pitches, has proved adept at talking venture capitalists into lending him money. In June, Distil announced a $21 million funding round led by California-based Bessemer Venture Partners, its first major investment from a West Coast venture fund. The raise added David Cowan, co-founder of Reston domain-name giant Verisign, to Distil’s board of directors.
Both start-ups make their money detecting “bots,” computer programs that perform simple tasks over and over at superhuman speed. Hackers use such programs to continually probe the external walls of a company’s network for vulnerabilities. These “brute-force attacks” can use bots to crack password encryption by rapidly guessing millions of keystroke combinations until one clicks into place. And websites that profit from click hits will sometimes employ bots to falsely inflate Web traffic, to the outrage of advertisers.
These sorts of programs aren’t always used nefariously. Google uses them to find and rank content from around the web. Baltimore-based Terbium Labs, a cybersecurity company started by a group of Johns Hopkins physicists, uses them to help companies track down stolen data after a hack.
“Bots are a platform for people to do good things or bad things,” said Essaid.
Distil and ScrapeSentry try to accomplish the same goal for similar customers, but their methods are decidedly different. Distil works to detect and stop bots primarily through its technology, whereas ScrapeSentry relies more on the human element. ScrapeSentry’s dozen or so customers — which include Autotrader.com, Realtor.com and Easyjet.com — pay tens of thousands of dollars for ScrapeSentry’s analysts to work with and coach their security teams through the process of analyzing Web traffic. In essence, the 14-person company acts like a deployable team of consultants.
The company nets $2 million annually, “a small fraction” of what Distil pulls in each year, according to Essaid, who declined to disclose financial details about his own company.
Essaid says he plans to start looking for another acquisition opportunity in the second half of 2016.
“If you can find somebody that’s already doing [something] as a team, why not just port them in?” he said of his tendency toward acquisitions. “It just accelerates time to market.”