Ottawa-based cybersecurity startup Field Effect Software plans to “push heavier” into foreign markets such as the U.S., the United Kingdom and other parts of Europe after securing a $30-million debt facility from Scotiabank’s Technology Innovation and Banking Group.
The Glebe-based organization says it aims to use the new arrangement to finance “strategic acquisitions” that will help the company scale more quickly and grab a bigger share of the rapidly growing global cybersecurity market.
“It’s an incredibly crowded industry,” said Field Effect CEO Matt Holland, who founded the company in 2016 with business partner Andrew Loschmann.
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“The unfortunate side is the industry is crowded with not necessarily a whole ton of high-quality solutions, so standing out in a sea of marketing is sometimes a challenge. The only significant headwind that we face is the fact we’re a small Canadian company trying to compete with really big players in the U.S. I don’t think anybody really expects a Canadian company to be the calibre that we are. There’s a lot of brand work ahead of us.”
Holland said the firm has been trying to secure a debt facility with a major lender for some time, but the process bogged down following the collapse of California-based Silicon Valley Bank earlier this year – an event that led to a “heightened level of caution” from financial institutions that were looking at extending credit to tech companies.
“Everybody just froze and took a wait-and-see approach to where the whole credit industry was going to go,” he explained.
Field Effect’s flagship product, dubbed Covalence, uses analytics and machine learning to detect and neutralize cyberattacks. Its proprietary system alerts customers to potential threats and issues regular reports on suspicious activity in a “readable format” that’s designed for anyone – even the most IT-challenged manager – to understand.
Holland said the company’s acquisition activities will zero in on managed security services providers that have strong balance sheets, are located in geographic areas Field Effect doesn’t currently serve and can become users of the Covalence platform themselves.
This week’s announcement follows a series of funding rounds that saw Field Effect, which was initially bootstrapped, raise US$34.5 million in venture capital in 2022. The 185-employee firm’s revenues have been growing at about 75 per cent annually and now top US$20 million.
Field Effect has more than 1,000 customers, mainly small and medium-sized businesses, in Canada, the U.S., the U.K. and Australia.
Domestic clients account for about half of the company’s revenues, down from two-thirds a year ago as the firm continues to make inroads south of the border, across the Atlantic and Down Under.
But Holland is far from satisfied, saying he’d like to see revenues from U.S.-based customers more closely reflect that country’s 10-to-one population edge over Canada.
“If we can achieve that, that will be pretty fantastic growth,” he said.