Since August 2019 Pride Capital supports Link11, an innovative provider of DDoS protection software, secure DNS, bot mitigation and web application firewalls, with growth financing. Link11 was founded in 2005 and is headquartered in Frankfurt am Main, Germany. Around 50 dedicated employees work for the DDoS specialist. Management of Link11 uses our mezzanine loan to grow internationally and expand to other European countries. This article shares Pride Capital’s insights into a disruptive market.
The cyber security market
The market for cyber security solutions is attractive and constantly growing. Companies are starting to realise that lacking the appropriate protection can seriously damage business continuity. DDoS protection providers are typically characterised by a recurring and very profitable business model, which allows companies such as Link11 to access debt financing options at a very early stage.
The predicted rapid increase in the number of connected devices will increase the importance of effective DDoS defense. The number of devices will rise from currently approx. 8 billion devices to over 28 billion in 2022 (source: Cisco VNI Global IP Traffic Forecast, 2017 – 2022). DDoS software sales are projected to grow rapidly as well with an average annual rate of 14% between 2019 and 2024.
Link11’s Starting Point
Link11 developed a cloud security platform that protects companies of all sizes and across all industries from malicious application and website overload attacks. Even the smallest interruption to business-critical applications or services due to cyber-attacks costs companies not only time, nerves and hard cash, but also trust and reputation. Link11’s scalable platform, which blocks such attacks, is marketed in a recurring Software-as-a-Service (SaaS) model. Customers range from financial institutions, to logistics and ecommerce companies and are mostly located in Europe.
The intensity and number of complex multi-vector DDoS attacks has increased steadily in recent years and poses a major challenge not only for e-commerce companies. Prominent examples were GitHub in 2018, the UK National Lottery in 2017 or a client of Cloudflare in 2014. The aim of the attacks is no longer to completely paralyze homepages, but also to gain access to sensitive customer or company information via “backdoors”.
Public Cloud and Link11
The current trend of moving to the cloud creates a noticeable boost in flexibility and agility for many businesses, meaning that applications can be accessed remotely without any on-premise changes. Most large cloud providers (e.g. AWS, Deutsche Telekom, etc.) offer an integrated software solution to protect the cloud infrastructure and business continuity of their customers. This security layer is “hardware-agnostic” and does not require any technical changes on the customer side for the connection. The security management of the IT infrastructure is thus outsourced to the cloud. This is perceived as a very cost-efficient way by businesses to protect against DDoS attacks, especially for small and medium-sized companies without security-critical information.
In October 2019 however this perception lead to a damage of more than $ 100M, when AWS was partially not available for several hours and customers were not able to run their business applications. In addition to a complete or partial outsourcing of a business’s own infrastructure to the cloud, security software providers like Link11 offer businesses an additional security layer with a higher degree of individualisation of DDoS protection measures. With its “Security Cloud”, Link11 can position itself in front of the customer’s infrastructure and thus fend off DDoS attacks without changing the existing infrastructure. The latency of the customer is hardly affected. The demand for such solutions will continue to grow as companies build their own IoT environments and networks. Enterprise solutions are usually more expensive and companies thus face a trade-off. That’s why companies must carefully analyse their own risk and vulnerability to complex DDoS attacks in order to make an informed decision about the optimal level of DDoS protection.
In comparison to competitors, Link11 offers a patented “AI Shield”, which detects changes in attack patterns and adapts filters. This technical unique selling proposition leads to a reliable identification of threats without the customer noticing it in daily business. With other providers, the manual effort is usually somewhat higher resulting in a lower scalability.
Pride Capital and Link11
Link11 has received a mezzanine loan from Pride Capital Partners to finance national and international growth strategy. The mezzanine capital product has some characteristics of equity and therefore offers many of the advantages of a traditional minority stake, but without changing the shareholder structure or governance. Due to Pride Capital’s long-standing focus on the software segment, the cooperation offers additional strategic added value, for example in the generation of new leads or market entry strategies.
Link11 has already started their internationalisation process and hired local representatives in the Netherlands, UK and Nordics. Pride Capital positions itself as a sparring partner that helps identify organic and inorganic growth opportunities. Pride Capital finances companies in this market in growth, acquisition and management buy-out transactions.
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