CASE STUDY BitNinja Strengthens Position With USD 2.5 mln Investment

As “Invented in Hungary” was approaching deadline, U.S.-registered, Debrecen-based BitNinja closed a USD 2.5 million funding round in a transaction led by Lead Ventures, the specialist in scale-up financing in the Central and Eastern European region. BitNinja says it aims to become a major player in the global cyber security market with its server protection solutions.

By BBJ Staff

As corporate digitalization advances, the global cyber security market continues to grow. With the transformation of information systems, the methods of hackers who specialize in attacking them also change. Developers of cyber security solutions must react rapidly to these threats. SMEs are especially vulnerable with regard to IT security, as they usually lack proper protection and are unable to handle the consequences of a cyber-attack.

Recognizing this need, BitNinja began developing cyber protection solutions to web hosting providers. Its system detects, filters and eliminates attacks, while also collecting information about them as well. Once the information is gathered, the system automatically improves itself further, meaning that with an increase of users and more diverted attacks, it provides more effective protection.

BitNinja enjoys a clientele of major global web hosting providers such as Dreamscape, Fastcomet and Hostinger. Most of its dynamically growing turnover comes from the United States.

“BitNinja, founded in 2015, is registered in the USA, but the headquarter is based in Debrecen [231 km east of Budapest],” explains Zsolt Egri, CEO of the cyber security firm. “We decided to set up an American company because in this field, the major service providers are located in North America, besides Europe. Our main market is the United States.”

Previous funding rounds had raised USD 500,000 from various investors, which allowed the company to nearly double annual recurring revenue in the last 18 months, Egri says.

NEW PRODUCT

“With the current second round of financing, we wish to strengthen our product sales and significantly increase our current workforce of 37 employees. In addition, we want to introduce our new product to the market, a site protection solution, which has already generated great market interest,” he adds.

Balázs Haszonics, CFO of the Budapest-based Lead Ventures, explains what the VC investor sees in BitNinja. “This is an exciting Hungarian entrepreneurial success story, which we were immediately attracted to. The team, who started out as web hosting providers, realized that their servers and indirectly their customers, were under more and more attacks. They looked for their own solution to the problem,” he says.

“As a result, with several other investors, we have made the decision to support BitNinja’s development with an investment totaling USD 2.5 million. The majority of the capital, USD 1.5 million, is provided by us. Our plans span for a time period of 3-5 years. Our common goal is to make BitNinja an attractive target for overseas investors by the end of this period,” Haszonics adds.

The American-Hungarian iEurope and Oxo Technologies Holding have also joined the round as new investors, along with existing investors Octogon Ventures and Zoltán Györkő, Balázs Scheidler and Endre Wagner, the three founders of Balabit, a Hungarian security firm specializing in the development of IT security systems and related services that help businesses reduce the risk of data breaches associated with privileged accounts. In January 2018, Balabit was acquired by One Identity, a U.S.based provider of identity and access management solutions.