Difficulties in a tight capital market prompted the sale of Providence-based DefendNet Solutions to Guardent for an undisclosed amount.
The acquisition was announced by Waltham-based Guardent on May 22.
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
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DefendNet Vice President of Sales (and now senior director at Guardent) Tony DeSpirito said DefendNet had experienced some difficulties having only a single backer in today’s capital market.
“The way the capital markets have been for the past eight to 12 months, it is very difficult for a company with a single backer — which is what DefendNet was — to succeed,” said DeSpirito.
DefendNet received $8 million in venture capital funding last year.
But in DeSpirito’s estimation, “selling out is not necessarily a bad thing. We saw the Guardent acquisition as a way to continue and expand our current business.”
DefendNet was founded in 1996 (then Virtual Media Technologies) as an Internet integrator. Slowly the company changed its focus to become primarily an Internet security firm, and its name to DefendNet Solutions, Inc.
DeSpirito said that the type of growth now possible for the company would not have been feasible before.
“The prospect of us doing that alone — maybe we could have done it, but it would have taken a lot longer,” he said.
DefendNet co-founders Vincent Giordano and Sean Amaral have left the company as part of the sale agreement, along with 15 to 20 other employees from the human resources, marketing and finance departments, said Giordano.
“There were more casualties than we were happy with,” Giordano said. “In my opinion, it is unfortunate that it had to happen that way.”
Giordano said that consolidations have occurred at both companies in the sales and engineering departments as a result of the acquisition.
Giordano plans to take some time off to be a stay-at-home dad to his two small children.
“I will definitely start another business in Rhode Island,” Giordano said, and added that his fascination is with “taking technology and applying it to non-technological groups of people.”
The acquisition brings Guardent’s number of employees up to about 180, DeSpirito said, the bulk of whom are located in Waltham (65) and Providence (30). The remaining employees work out of smaller offices including those in New York City, Atlanta and Washington, D.C.
Founded in March 2000, Guardent is a provider of security and privacy programs for Global 2000 (companies with 500 to 2,000 employees) organizations.
Guardent co-founder and executive vice president Dan McCall called DefendNet a “great company in the managed security space. We’ve known about DefendNet since we founded our company a year ago.”
What Guardent found most attractive, McCall said, was DefendNet’s presence in the mid-tier market. That, he said, coupled with Guardent’s own Global 2000 clientele, will give the company a “great opportunity to attract both market segments.”
Guardent will move its primary security facility to Providence, which will involve the relocation of 10 employees who have been working in Waltham. Providence will also headquarter the company’s sales operation to mid-size companies.
McCall said the company — which had only three employees one year ago — has experienced significant growth over the past 14 months, and that even in the current economic shift, there is still a market for Internet security and protection.
In fact, there might be more demand for it.
“Companies are doing more business online – it’s just less expensive,” McCall said, and, in doing that, “they open themselves up to new issues of security.”
Guardent has also announced that it has closed $20 million in a Series C round of equity financing led by Citigroup’s e-Citi unit. Mercury Interactive and existing investors Charles River Ventures, NewEnterprise Associates and Sequoia Capital also participated in this funding round.
The company will use this round of financing to continue the expansion of its integrated security and privacy services, including its new managed security offering.
Launched earlier this year, Guardent’s managed security services are the fastest growing offerings in the company’s vast array of services. The company now manages security on a 24 hour, seven days a week basis for over 100 organizations.
Upside magazine recently named Guardent as one of the “Hot 100 Private Companies in 2001.”
