Shift5 Raises $50M As Investors Continue Pivot To Protecting Infrastructure

Arlington, Virginia-based cybersecurity company Shift5 closed a $50 million Series B led by Insight Partners—the latest example of investors returning to the operational technology (OT) security space.

The round comes less than four months after Shift5—which defends military platforms and critical transportation systems from attacks—closed a $20 million Series A.

The round is another example of industrial or OT security re-engaging with investors. The sector saw a massive amount of interest around 2018-19, with companies like Armis Security, Claroty, Dragos and Nozomi Networks alone raising nearly a quarter-billion dollars, according to Crunchbase data.

However, the preceding years brought a lull to the sector—until 2021.

Last year saw a plethora of deals. In August, San Francisco-based Nozomi Networks closed a $100 million round. In late October, Hanover, Maryland-based Dragos raised a $200 million Series D funding at a valuation of $1.7 billion. In November, Palo Alto, California-based Armis Security closed a $300 million private equity round—just nine months after it raised $150 million—at a $3.4 billion valuation.

Finally in December, New York-based Claroty closed a $400 million Series E co-led by new investor SoftBank Vision Fund 2 after raising a $140 million Series D in June.

Experts in the industry attribute the increase in investment to the uptick in attacks on key,  critical infrastructure. The industry came back into the spotlight in May, when the Colonial Pipeline—a 5,500-mile pipeline from Texas to New York that transports just less than 50 percent of  the East Coast’s fuel supplies—was shut down by a ransomware attack. That was quickly followed by the Metropolitan Transportation Authority’s computer systems being hacked. There also have been numerous other attacks against key industrial and infrastructure sites.

Illustration: Dom Guzman

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