Industrial Automation & Sensors Blog

Claroty, Competitors Continue OT Cybersecurity Arms Race

by Jared Weiner | 3/12/2024


What Happened?
Last week, Claroty announced it had raised $100 million in strategic growth financing. Building on $635 million in previously-raised funding, Claroty will use this new round―led by investments from Delta-v Capital, SE Ventures, and Rockwell Automation, among others―to scale the company’s solution offerings, expand in emerging regions, develop core and adjacent technologies, and strengthen its partnership ecosystem.

Earlier today, Nozomi Networks announced a $100 million round of funding of its own. Including investments from Mitsubishi Electric and Schneider Electric, this funding is similarly earmarked to scale product development efforts and go-to-market initiatives globally.

VDC’s View
Claroty’s announcement is the latest in yet another string of significant investments and acquisitions in the market for OT/ICS cybersecurity solutions. In September 2023, Dragos announced a $74 million Series D extension (bringing its total funding to $440 million) intended to enable the company to accelerate various go-to-market initiatives and product development efforts. Armis, meanwhile, disclosed late last year its intention to pursue an IPO as early as the second half of 2024, and followed that up by announcing an agreement to acquire CTCI, a vulnerability exploit tracking startup, in February 2024. Other recent acquisitions include those by Honeywell (SCADAfence, July 2023) and Rockwell Automation (Verve Industrial Protection, October 2023), among others.

These moves are reflective of not only the dynamic growth trajectory of this market but also the increasingly embraced (in the OT space, anyway) defense-in-depth strategy that demands organizations take a layered and complementary approach to implementing cybersecurity protections. With many organizations also preferring to minimize the number of vendors from which they buy cybersecurity solutions, market leaders have endeavored to extend the breadth of their solution sets to address a wider range of cybersecurity parameters. Doing so requires resources―either technological or financial―such as those of the market leaders as described above.

The development of software-as-a-service (SaaS) offerings is among the most prominent areas of focus for software vendors in this space. While SaaS solutions are common for many enterprise/IT applications, adoption in the industrial sector has been slow due to the traditionally isolated nature of most OT networks. However, as industrial organizations become more comfortable with their OT systems’ connectivity, SaaS-based OT cybersecurity solutions have become instrumental in enabling industrial organizations to extend their cybersecurity implementations in a manner that is both flexible and cost-effective.

VDC forecasted SaaS-based revenue as the fastest-growing product segment when we last assessed this market in early 2023, but where do things stand as we progress into 2024? How will the convergence of OT, IT, and IoT networks continue to shape this market? How do industrial cybersecurity vendors help customers address compliance requirements? VDC will explore these topics and more in our upcoming study, The Global Market for Industrial Cybersecurity Software & Services. Please visit our website or contact us for more details!