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Veracode Inc. has secured a $5 million tranche of venture financing, part of a $10 million Series C round that has brought the Burlington-based security testing software company’s total investment up to $29.5 million, according to company executives and published reports.
Veracode offers an on-demand testing service for application software, designed to flag security risks in application coding. Returning investors include .406 Ventures, Atlas Venture, Polaris Venture Partners, Macrovision Corp., Symantec Corp. and In-Q-Tel, the venture investing arm of the CIA.
The company, launched in 2007, tripled its business in 2008 and expects to double in size in 2009, said CEO Matt Moynahan. “2009 is the year of the partner for Veracode,” he said. The company plans to OEM with consultants and managed security software providers, Moynahan said. He declined to provide specific customer numbers.
However, he said current marquee customers include Barclays PLC, Delta Air Lines Inc. (NYSE: DAL) and First Data Corp. Veracode next expects to expand into United Kingdom markets and add clients in the U.S. government, he added.
Much of Veracode’s government business will rely on the company’s ability to verify the enterprise-worthiness of open-source software, Moynahan said. “The government’s got a big push toward hardening open-source,” in order to save by using open-source software, he said. “It’s very difficult to prove how secure open-source software is.”
Moynahan declined to specify when the company expects to reach profitability.
As it expands, the company expects to add a limited number of sales and engineering staff, he said. Veracode now employs 60 staff and its computing infrastructure is 100 percent cloud-based, Moynahan said.
In an email today, board member and .406 general partner Maria Cirino wrote, “.406 is thrilled to participate and expand our ownership in this round and is very pleased with Veracode’s unique position as the industry’s first and only on-demand service enabling organizations to finally get a complete and accurate view of application vulnerabilities.” She added, “Veracode’s rapid growth and impressive traction with (Fortune) 500 customers is further proof that the company is well positioned and executing well.”
The company has so far pulled down $5 million of the total $10 million round, the website PEHub.com reported, citing a regulatory filing. Moynahan declined to comment on that report or specify how much of the current round the company has received.
Editor's Note: This story updates an earlier online version with information and statements from an interview with Veracode CEO Matt Moynahan.
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