Equity Firm LLR Partners Acquires BluVector

Earlier this month (January 2017), U.S. private equity firm LLR Partners acquired BluVector. While the amount was not disclosed, LLR committed to investing US$50 million into BluVector to support the acquisition and plan for future expansion. LLR invests primarily in vendors offering software technology and services across various markets, including healthcare, business, finance, education, and security. Within the security market, the firm is pursuing commercial and government solutions in both physical and cyber. Past cybersecurity investment funded rounds for Agility Recovery, Cigital (US$50 million in 2013) and spin-off Codiscope (US$5 million in 2015), Digital Guardian (US$66 million in 2015), iJET, and Mercury Security.

LLR Partners acquired BluVector from defense contractor Northrop Grumman. The contractor holds one of the largest cybersecurity business operations globally, due to sustained investment in, and the development of, cybersecurity technologies and services. Over the last decade, Northrop established itself as one of leaders in offensive, defensive, and situational cyber capabilities (primarily focused on the network) and has been actively integrating cybersecurity technology into weapons systems for electronic warfare purposes. Northrop’s cyber-related portfolio is estimated at US$2 billion (based on invested companies’ revenue). Its divestiture of BluVector is part of its move to leave the commercial market and focus exclusively on the defense market, notably in space and airborne intelligence, surveillance, and reconnaissance. 

BluVector specializes in machine learning to detect cyber threats and provide appropriate response. The algorithm is based on years of malware analysis and classification data. The firm will operate as a standalone business headed by Kristin Lovejoy—who previously headed IBM's Security Services Division—as the CEO. BluVector’s machine learning technology is designed to integrate with existing network security appliances such as threat intelligence data feeds, SIEMs, IPS/IDS, and firewalls.

For LLR Partners, BluVector is a solid acquisition. The firm’s technology is designed to comply with defense-level requirements and already has an established base of clients within the sector since its launch in 2015. Most importantly, it focuses on machine learning, which is where current cybersecurity efforts are concentrating. The shortage in cybersecurity professionals left a void in enterprise defenses that cybercriminals are exploiting successfully. The continued high profile breaches and leakage of huge swathes of data daily, and in all sectors, is relentless. Enterprises, even those with significant resources, are unable to find the qualified human resources needed to implement and uphold adequate security postures. Many cybersecurity firms are, therefore, keen to drive machine learning and artificial intelligence development to effectively fill that skills gap.

The current battle in the field is to be able to detect unknown threats such as zero-days and provide the lowest false positive rates possible. This is difficult, as machine learning algorithms typically tend to leverage data sets and learn from known patterns. How do you teach a machine what it (or the programmer) does not know yet? Nonetheless. Advances in machine learning are making huge bounds, and quickly. Google’s recent exploit with MasterGo presages advances in AI technology that were not thought to happen for another decade. Machines will be able to learn without input of historical data, but instead simply by learning on the fly. This exploit provides hope for the cybersecurity industry that AI, and machine learning, may be able to solve the skills crisis and start tackling the insecurities of the online world.