Boulder cybersecurity firm LogRhythm raises $50M to boost R&D, marketing

BOULDER – Cybersecurity firm LogRhythm Inc. announced Tuesday morning that it has raised a new $40 million equity funding round that company leaders say should help the Boulder-based firm reach profitability.

In addition, LogRhythm secured $10 million in debt financing that helped limit dilution and the cost of capital for the new round.

While he didn’t rule it out, CEO Andy Grolnick said the company doesn’t anticipate needing to raise another equity round. The quick-growing firm founded in 2002 has for years been mentioned as one of Colorado’s next likely candidates for an initial public offering, but this new round of funding tables any such talk, at least for the short term.

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“A company like ours, we’ve got multiple options,” Grolnick said in an interview. “An IPO is certainly an option down the road. It’s not something we’re pursuing right now in the short term.”

LogRhythm makes advanced analytics-based software that companies deploy on their networks to look for any sort of nefarious activity that gets through their traditional layers of protection, as well as any fraudulent activity that might be going on internally.

Matt Winter, vice president of corporate business development, said that, as the power of technology has increased rapidly in recent years, hackers and foreign adversaries have gained access to many of those advances. So in addition to solidifying LogRhythm’s balance sheet and providing funds to ramp up sales and marketing, the new funding round will just as importantly help fuel continued research and development to keep the company’s software a step ahead of the bad guys.

Cybersecurity is top of mind for many companies, Winter said.

“They’re spending more and more on security,” he said. “We really want to help them optimally protect themselves.

“This round of financing will enable us to continue to invest in innovation and deliver greater value to our customers.”

The new $40 million in equity funding adds to the $72 million LogRhythm had raised previously, and it follows another $40 million round raised in 2014. The new equity round was led by existing investor Riverwood Capital. Adams Street Partners, Siemens Venture Capital, Delta-V Capital, EDBI, Exclusive Networks and members of the company’s management team all participated.

Winter said only about a quarter of the company’s business is outside of the United States, a metric he expects to grow with the new funding.

The privately held company doesn’t disclose revenue. But the firm has added employees quickly in recent years. Grolnick said the company employs about 600 worldwide now, including roughly 375 in Boulder, where LogRhythm earlier this summer expanded into another 21,000 square feet of office space in the Pearl East Business Park.

LogRhythm lists 46 open positions on its website now, and Grolnick said he expects to add about 60 people over the next 12 months.

“We are excited to deepen our partnership with LogRhythm as the company accelerates its global growth,” Riverwood Capital founding partner Jeff Parks said in a news release. “We continue to be impressed with LogRhythm’s ability to drive technical innovation while simultaneously taking customer adoption and market reach to new levels. The combination of continued business momentum and strong operational execution is accelerating the company’s market leadership and competitive advantage in the rapidly growing security intelligence and analytics space.”