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Cybersecurity Firm Rapid7 Files For $80 Million IPO

This article is more than 8 years old.

Boston-based cybersecurity firm Rapid7 announced its plans to go public in an SEC filing on Thursday, confirming rumors that the company was one of several security firms with IPO plans this year. The company is seeking to raise $80 million in the IPO, according to the filing.

Founded in 2000, Rapid7 uses data analytics to reduce security threats and detect system intrusions. The company has received $90 million in funding from investors including Bain Capital and Technology Crossover Ventures. Most recently in December 2014, the company received $30 million in equity funding to expand its business. The company now has 3,900 customers in over 90 countries, including 30% of Fortune 1000 companies.

According to the filing, Rapid7 had $76.9 million in revenue in 2014, up 28% year-over-year. The company's 2015 Q1 revenue of $23.6 million is up 41% from 2014. Rapid7 is not yet profitable with a net loss of $32.6 million last year and $8.5 million in the last quarter. Rapid7 declined to comment on the filing, due to quiet period restrictions.

The cybersecurity industry is booming as breaches and nation state attacks continue to dominate headlines. While VC investment in cybersecurity is on the rise, cybersecurity IPOs in the United States have been few and far between. Since November 2009, there have only been 17 IPOs in the security space (seven of which happened in 2012), according to research done by Pitchbook. The most recent security IPO was MobileIron's $100 million exit almost a full year ago in July 2014. FireEye had biggest security IPO in the past five years at $349 million in September 2013.

While the number of security IPOs has decreased since 2012,  venture capitalists are pouring more and more investment money into the sector. Since 2009, the amount of venture capital invested in cyber security has increased every year, according to Pitchbook's research. In 2014, venture capitalists invested $2.73 billion in 242 deals. So far in 2015, we've seen $1.11 billion invested in 93 deals.

Rapid7 is one of a small handful of security companies predicted to IPO this year. In early March, Fortune reported that another Massachusetts-based security company, Veracode, had privately filed for IPO after raising $110 million in VC funding. The company has yet to publicly file an S-1 with the SEC. In March, Reuters predicted that Rapid7, LogRhythm, and Mimecast would all go public this year. In a meeting last week, Zscaler CEO Jay Chadhry told me that his company, which is valued at $1 billion with only $5 million in venture funding, would likely go public later this year.

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