Human Security, a bot mitigation and fraud detection platform for enterprises, is merging with PerimeterX, a company focused on safeguarding web apps from account takeover and automated fraud. Terms of the deal were not disclosed.
The combined entity will comprise nearly 500 employees, and it will eventually fall under the Human Security name once the two respective platforms are integrated -- though when that will be isn't yet clear.
"While I can’t provide an exact timeline, I can say we have two excellent teams coming together, and we have already done an incredible amount of work together to get to this point," Human cofounder and CEO Tamer Hassan told TechCrunch. "We are doing everything we can to make the integration as fast and frictionless as possible so that our combined customers truly are getting the best of both products."
As part of the deal, Human said that it has received a $100 million debt facility from Blackstone Credit, which follows seven months on from a $100 million growth round of funding. PerimeterX, meanwhile, raised a $57 million funding round last year.
Attack of the bots
The problem both companies have been setting out to solve is that a vast chunk of online security and fraud incidents are driven by bots -- and these bots have become more sophisticated through the years as they adapt their behavior to become more difficult to detect. Nefarious activities include scraping content, such as personally identifiable information (PII) from websites and applications, or so-called "click fraud" which essentially involves bots tapping on pay-per-click (PPC) ads to inorganically increase revenue for a website.
Human Security (formerly known as White Ops) and PerimeterX address the bot attack problem through using machine learning to understand authentic "human" behavior, which helps to detect anomalous actions driven by bots. However, they are not exactly the same products, with each focusing on different domains -- for example, PerimeterX is big on account protection -- while they have different sectors in their crosshairs.
"PerimeterX has protected mostly e-commerce companies, while Human has protected adtech, performance marketing and cybersecurity / application security teams," Hassan said. "Our goal coming together is to unite these silos and solve this significant problem across the enterprise."
Cybersecurity startups enjoyed a stellar year in 2021, drawing in a record $29.5 billion in funding -- more than double the previous year's figure. The need for such technology is greater than ever as ransomware attacks and data breaches proliferate, while the remote-working surge continues apace -- but cybersecurity startups haven't been impervious to the economic downturn, with numerous layoffs announced across the industry these past few months.
While cybersecurity companies are generally well-positioned to flourish in the long-term given that attacks and breaches aren't going away any time soon, as tech valuations plummet and a giant "reset" continues to impact companies of all sizes, consolidation via mergers and acquisitions (M&A) is one strategy for addressing this.
In gaming, we've recently seen Unity merge with IronSource, while in the aerospace sphere Eutelsat and OneWeb yesterday announced plans to unite as a single European satellite company. And in cybersecurity specifically, countless M&A deals have come to fruition this year, involving big tech companies such as IBM and Google, as well as smaller venture-backed companies looking to expand quickly.
Founded in New York in 2012, Human Security was actually acquired by Goldman Sachs’ merchant banking division, ClearSky Security, and NightDragon back in 2020, so it's perhaps less exposed to the economic downturn as other cybersecurity startups out there. But by merging with a rival in the space, it can grow at a pace that would otherwise be difficult through more organic means.
"By combining the companies, and increasing the amount of joint data across multiple verticals, we have an unparalleled source to improve our overall detection for all joint products, as well as a strong foundation for new products offered to help protect our customers," Hassan said.