ConSentry Networks wins $21M

Milpitas, Calif.-based ConSentry makes local-area-network security appliances that allow information technology professionals to monitor network admission, usage, resource access and potential threats to sensitive information.

The networking company tapped new investor Teachers' Private Capital of Ontario to lead the round, joined by Translink Capital of Palo Alto, Calif., and NCD Investors. Existing venture backers Accel Partners of Palo Alto, Calif., Sequoia Capital of Menlo Park, Calif., Invesco Private Capital of New York and Palo Alto-based DAG Ventures, a unit of private equity firm Duff Ackerman & Goodrich LLC of San Francisco, also participated in the financing.

The oversubscribed round gives ConSentry a total of $72 million in funding to date. Dan Leary, ConSentry's vice president of marketing, said the company had wanted to hold the round to $20 million, but demand to get in from investors and partners was strong enough for ConSentry to slightly raise the cap.

"It was essentially a two-month [fundraising] process for us," he said. "There was lots of interest from the venture backers and also from partners that are seeing success with us and wanted an opportunity to invest in the company as a result of that."

ConSentry has been consistently closing new financing rounds each year since its inception in 2003. In July 2006 ConSentry closed a $17 million fourth round to follow up a $12 million round in July 2005. The $21 million second round closed in July 2004 after a small initial round got the company started in 2003.

Although Leary would not specify a valuation for the fifth round, he did say that it was an "up round,"

He added that the company isn't exploring an initial public offering and has not yet decided if it will raise more venture capital. ConSentry isn't yet profitable, but third-quarter sales increased by 25% quarter over quarter, a rate the company expects to be able to sustain for the foreseeable future, according to Leary.

While there are other companies whose products intersect theirs, ConSentry sees Cisco Systems as it primary competition. ConSentry claims that 85% of its customers have Cisco switches but that it's been able to win those customers by offering more control to clients over their users rather than simply authenticating them to the network and scanning their machines.

ConSentry's lead product, the LANShield platform, is designed to provide perimeter security and operate at speeds in the gigabit-per-second range. According to Leary, the company offers security product in two forms, "an appliance-based solution that sits behind the wiring closet switches, and we also sell our security capability embedded directly in the access layer switch."

"We do see more business and growth accelerating in the [access layer switch]," he continued. "We'll aggressively be looking for more opportunities to sell the switch."

The company began shipping its appliances in September 2005 and has signed 150 customers thus far, including Continental Airlines Inc., law firm McDermott Will & Emery and Banco Santander Central Hispano SA. ConSentry's top vertical markets are financial services, healthcare, manufacturing and education.

Leary said the money will be used to "continue to build on our operations, with investments in both engineering and sales primarily."

The company also announced that Basil Alwan, the president of Paris-based Alcatel-Lucent's IP division, has joined its board of directors as an independent member. Alcatel-Lucent is a ConSentry OEM partner.