Darktrace is now worth $500m and has IPO ambitions

Lynsey Barber
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Cybersecurity startup Darktrace is worth more than ever (Source: Getty)

One of the UK's hottest tech startups is now worth half a billion dollars and has ambitions to go public, City A.M can exclusively reveal.

Darktrace, the cyber security startup which boasts backing from top Silicon Valley venture capitalists, Wall Street investors and former Autonomy entrepreneur Mike Lynch, was valued at $450m after a major round of funding over the summer.

Now, that valuation has surpassed the $500m mark, sending it galloping towards rare unicorn territory of $1bn amid worries surrounding the UK's ability to produce top tech firms on the scale of Google or Facebook.

Read more: The UK is second in the world for tech startup exits

Organic growth in the business, which already stood at 600 per cent in terms of revenue in the last financial year, has sent the the Cambridge and San Francisco-headquartered firm's valuation soaring higher in the last few months, hitting the milestone figure.

The company, which boasts top security experts from UK and US spy agencies, also revealed that its "ultimate ambition" is to IPO, speaking to a group of investors and entrepreneurs.

For now, it is focused on "growing the company as fast as possible", a spokesperson said, and an IPO was not on the immediate horizon.

The three-year-old startup's unique selling point is spotting cybercrime as it happens within the networks of businesses such as HSBC and Drax power station. It uses machine learning and algorithms to identify anomalous behaviour and has also recently launched a new product which can take action against the threats it spots.

However, it is also eyeing a move into consumer facing devices which are increasingly connected to the Internet.

It is working with Samsung on incorporating Darktrace into the home environment where it has devices such as smart TVs and connected fridges after inking a deal with the South Korean firm in August that also included investment in the startup.

Driverless cars and smart cities are also an area of expansion being eyed by Darktrace, though work would need to be done on making the technology smaller and more energy efficient.

Concerns over Britain's ability to produce and sustain top tier tech companies have risen in the wake of the vote to leave the EU and after Arm's acquisition by SoftBank, the Japanese bank which has also invested in Darktrace via an affiliate fund.

However, one tech insider indicated that the UK tech sector, which is far less established than Silicon Valley, is maturing fast and ready to produce more success stories.

"It takes time to get to that and there's no shortcut," said GP Bullhound co-founder and managing partner Manish Madhvani.

"In Europe, there's no issue in creating these billion-dollar companies now, and the UK is the driving force behind that – it contributes the most – but $10bn is always a threshold. We've now had our first [in Europe], Supercell, and Spotify is arguably getting to that level now. $100bn is the challenge, and that, I imagine is going to take another five years. But is there an issue of creating companies of scale? Absolutely not," he said.

He cited more experienced entrepreneurs "who have been through the cycle once" as more equipped to scale up businesses, the amount of capital coming into the sector and ambitious entrepreneurs thinking more globally earlier on as signs of a maturing sector.

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