Emerging Threats acquired by Proofpoint: Investor Reactions

In an open letter to his customers last week, Emerging Threats CEO Ken Gramley broke the good news that the malware security and compliance company was being acquired by Proofpoint, Inc. for $40 million in cash and stock.

ET_PP_Logo

Proofpoint is a publicly traded NASDAQ company that also specializes in security and compliance like Emerging Threats. Proofpoint has more than 3,000 customers including global enterprises, universities and government agencies, supporting tens of millions of users. More than 40 percent of the Fortune 100 rely on Proofpoint for their security and compliance needs and Gartner positioned Proofpoint in the Leaders Quadrant in their 2014 Magic Quadrant for Secure Email Gateways, and 2014 Magic Quadrant for Enterprise Information Archiving,

Ken also revealed that Emerging Threats’ team of renowned threat researchers, software engineers and sales personnel will continue to operate from the Emerging Threats headquarters in Indianapolis.

Here’s what Ken said customers can expect to change due to this acquisition:

We will retain all the technical talent that has helped us be successful to date. In addition, Proofpoint is committed to increasing the investment in Emerging Threats’ threat research and development capabilities, allowing the combined company to produce even more timely and accurate threat intelligence. This will benefit both of Emerging Threats’ customer segments, OEM and enterprise end users, as well as Proofpoint’s enterprise customer base.

Our OEM customers should expect business with Emerging Threats to continue as usual. With additional investment by Proofpoint, however, the stand-alone threat intelligence products will be enhanced in both breadth and depth of coverage.

Our Enterprise end users will also benefit from the increased investment in development of all products. Perhaps even more importantly, customers who are interested will benefit from the integration of the two company’s products to form a complete solution for the entire attack chain.

Elevate Ventures and the HALO Investor Group were the primary investors that backed Emerging Threats as they raised $2.15 million in two venture funding rounds.

Elevate Ventures is a private venture development organization that nurtures and develops emerging high-potential businesses by providing access to capital, rigorous business analysis and robust advisory services that connect companies with the right mix of resources businesses need to succeed long-term.

The HALO Investor Group is an angel investor group where many of Indiana’s most successful and experienced entrepreneurs and executives invest together in Indiana’s most promising emerging companies. We asked two individuals from Elevate and HALO who worked closely with Emerging Threats to share their thoughts on the acquisition.


Bill Godfrey, Co-founder and former chairman and CEO of Aprimo (now Teradata)

Bill invested in Emerging Threats through the HALO Investor Group.

Question: What drew you to Emerging Threats as an investor in the first place?
Answer: “I was impressed by the company’s vision and leadership team, as well as the IT spending trends in the broader security market.”

Q: What impact do you expect the acquisition to have?
A: “Emerging Threats is a strategic addition to Proofpoint’s solution portfolio. And it’s great that Proofpoint plans to continue hiring in Indiana to build out the Emerging Threats product line. This creates a win-win for Indiana’s tech ecosystem. More job growth and more capital to re-invest in other promising start-ups.”


Ting Gootee, Chief Investment Officer at Elevate Ventures

Q: What drew you to Emerging Threats as an investor in the first place?
A: ​A solid founding team with deep domain expertise and a product well recognized by the security industry but yet to translate into meaningful revenue.​

Q: As an Indiana-based investor investing in an Indiana-grown company, what thoughts do you have to share about this acquisition?
A: ​This acquisition demonstrated a viable path to capital-efficiently creating substantial value for all shareholders and employees ​in a short period. Indiana is well positioned to leverage that approach to create more and fast wins.

Q: What impact do you expect that this acquisition to have?
A: ​Particularly because Indiana is not well known for internet security startups, Emerging Threats’ success and continued growth would hopefully create more internet security assets (people and expertise) here in Indiana.​

Q: What will this acquisition mean for Indiana and/or for the founders, investors and people behind Emerging Threats?
A: ​The most exciting part for me was the win-win outcome for all — the founders, investors and all employees. Sometimes in company acquisitions, there are winners and losers. In this case, everybody is happy in the end, and that’s what happens when you take a collaborative approach, try to build consensus while ​respect one another’s views, and focus on building a great business.​

ABOUT THE AUTHOR

Joshua Hall is editor of techpoint.org. He writes about Indiana tech companies, jobs, people & events. @joshua2349