By Alicia Wallace, Camera Business Writer
Boulder-based LogRhythm has raised $40 million, a funding round that company officials say could vault the security intelligence and compliance firm to position for an eventual initial public offering.
The equity investment, which is LogRhythm’s largest round to date, was led by Riverwood Capital and included participation from Piper Jaffray and existing investors Adams Street Partners, Access Venture Partners and members of LogRhythm senior management, company officials were set to announce this morning.
Company officials plan to distribute the latest haul in four areas: new product development, market expansion, customer service enhancements and strengthening the balance sheet, said Andy Grolnick, LogRhythm’s chief executive officer.
LogRhythm’s customers include medium to large enterprise businesses in areas such as financial services, health care, retail and government.
The increasing frequency of data breaches has spurred a sense of urgency among businesses in those industries to take action, he said.
“There’s just been an acceleration in sophistication by the bad guys … many of those threats evade traditional defenses,” he said. “As a result, there’s increased investment in technologies and solutions that are focused on early detection and response capabilities.
“That’s really our sweet spot and our wheelhouse.”
The privately held LogRhythm does not disclose specific financial information or annual revenue, but Grolnick said the company’s recent employee growth can give a sense of scale for sales growth.
Since the beginning of the year, LogRhythm has added 40 employees, bringing its total worldwide workforce to 300 people. Of those, about 200 are based in Boulder.
Locally, LogRhythm already is embarking on a physical expansion.
The company leased nearly 20,000 square feet at 4840 Pearl East Circle and is in the process of an interior remodel, according to building permits recently approved by the city of Boulder.
LogRhythm’s headquarters fill out 40,000 square feet at the neighboring 4780 Pearl East Circle.
In the next 12 months, LogRhythm likely will add another 50 employees across the company, Grolnick said.
LogRhythm has raised about $71 million since its founding in 2003. Considering the size of this latest round, market conditions and the company’s positioning, LogRhythm is starting to make good on its long-term strategy of building a strong, independent security intelligence firm, Grolnick said.
“The plan is to (execute) an IPO some time in the future, this really being the last round before an event like that,” he said.