Claroty Secures $150M to Pioneer AI in Infrastructure Security

Claroty, a leader in cyber-physical systems security, has secured $150 million to enhance its understanding of vulnerabilities in industrial physical assets. This funding aims to bolster its capabilities across key sectors such as healthcare, manufacturing, and industrial applications, effectively addressing unique challenges like proprietary protocols and critical risk prioritization.

According to CEO Yaniv Vardi, this Series F funding round, led by Golub Growth, is pivotal for the company’s strategic objectives. Claroty intends to assess metrics such as annual recurring revenue (ARR), profitability, and platform differentiation as indicators of its readiness for an initial public offering (IPO). Vardi emphasized the importance of having a sustainable financial foundation for achieving either profitability or facilitating an IPO.

While Vardi declined to disclose the valuation linked to this funding round, reports indicate that Claroty is valued at approximately $3 billion, following a $100 million growth investment from Delta-v Capital 22 months prior. The company, founded in 2015 and employing 815 individuals, has been under Vardi’s leadership since July 2020.

Potential for Future Acquisitions

The escalating threat landscape facing critical infrastructure has prompted Vardi to advocate for increased investment in AI-driven solutions. As healthcare attacks surge and manufacturing experiences heightened risk, there is a pressing need for advanced automation and intelligence integration within Claroty’s technological framework.

Vardi noted that the reopening of the IPO market comes with stricter expectations. Firms must now present substantial recurring revenues and a clear path to profitability while demonstrating market differentiation. Claroty is actively focusing on ensuring predictability through disciplined forecasting and consistent performance.

As for future acquisitions, Claroty seeks companies that offer technology complementary to its existing platform, particularly those aligned with its zero-trust principles. Opportunities for expansion into new verticals and geographies, such as public sector engagements, are also on the table. Vardi expressed that the acquisition process begins with identifying potential partners, followed by discussions to gauge fit for collaboration or acquisition.

The Limitations of Manual Security Measures

Claroty recognizes the shortcomings of traditional manual asset mapping and vulnerability analysis, particularly in fast-paced industrial environments. Enhanced automation through AI allows the company’s platform to efficiently parse original equipment manufacturer (OEM) data and provide insights into asset risks and mitigation strategies.

Vardi explained that relying solely on manual processes leads to inefficiencies in managing extensive asset inventories. Claroty’s incorporation of AI enables not only ongoing discovery and risk assessment but also integrates threat intelligence, enhancing the response to potential vulnerabilities.

The difficulties of adapting off-the-shelf cybersecurity tools for operational technology settings are significant, given their inability to decode proprietary communication protocols found in industrial environments. This gap further underscores Claroty’s focus on process-aware risk prioritization tailored to its unique market verticals.

Amid industry consolidation, Claroty maintains its autonomy, allowing it to pursue an innovation-led strategy unimpeded by external corporate agendas. Vardi noted that this independence positions Claroty favorably to continue evolving and pushing the boundaries of cyber-physical security solutions.