Cybersecurity Landscape Shifts as Palo Alto Networks Eyes Bridgecrew Acquisition

Update: Following the publication of this report, Palo Alto Networks officially announced the acquisition of Bridgecrew for $156 million. The original article detailing the impending deal is presented below.

The increasing reliance on online platforms, accelerated by the pandemic, has significantly intensified pressures within the cybersecurity sector. Now, a major public entity in this field, Palo Alto Networks, appears poised to expand its capabilities through an acquisition. This strategic move aims to bolster its offerings with security tools specifically designed for DevOps professionals, enabling more efficient handling of substantial security data volumes.

Bridgecrew: Automating Security Remediation

Sources indicate that Palo Alto Networks is acquiring Bridgecrew, an Israeli startup specializing in the automation of network monitoring and security remediation. Bridgecrew’s technology translates security feedback directly into code, streamlining the process for businesses experiencing rapid growth. The company’s tools are currently utilized by prominent, internet-focused organizations such as Robinhood, BetterHelp, and OneMain Financial.

Initial reports in Israeli media earlier this month suggested a deal value exceeding $100 million. Two independent sources subsequently confirmed ongoing negotiations, though a finalized agreement hadn’t been reached at that time. A recent report from Israel’s Calcalist estimated the acquisition value at approximately $200 million, potentially higher when including earn-out provisions.

Individuals familiar with the startup’s investor network have confirmed that the agreement has been formally signed. An official announcement from both companies is anticipated within the coming week.

Representatives from both Palo Alto Networks and Bridgecrew previously refrained from commenting on the potential deal when contacted earlier this month. Further inquiries have been submitted to both organizations.

Strong Returns for Bridgecrew and Investors

A $200 million valuation would represent a substantial return on investment for Bridgecrew and its financial backers.

The startup, supported by investors including Battery Ventures and Operator Partners, among others, has raised approximately $18 million in funding, including a $14 million Series A round last year. PitchBook data indicates a valuation of around $40 million at the time of that funding round.

Growing Focus on Cybersecurity

Cybersecurity, and particularly the demand for advanced solutions to combat an escalating threat landscape, has been a key area of focus for several years. This trend has positively influenced Palo Alto Networks’ growth trajectory.

The COVID-19 pandemic has further amplified the importance of cybersecurity and the need for increased automation within the field.

The shift towards distributed, digital-first, and cloud-based environments has resulted in more fragmented, complex, and vulnerable architectures. This expansion creates a larger attack surface for malicious actors.

This presents a significant challenge for security professionals, leading to the emergence of companies developing automated solutions that integrate DevOps with security monitoring.

“We founded Bridgecrew because we identified a significant bottleneck in security engineering, specifically within DevSecOps, and how engineers manage cloud infrastructure security,” explained Bridgecrew CEO and co-founder Idan Tendler in a TechCrunch interview last year. Other companies operating in this space include PortShift (acquired by Cisco last year) and Tines.

Palo Alto Networks and Prisma

Palo Alto Networks has been independently developing its own DevOps security tools, most notably through its Prisma platform, launched in 2019 and updated the following year.

The rationale behind supplementing Prisma with an external acquisition remains unclear, but Bridgecrew’s specific focus on DevOps security and its demonstrated success in this area are noteworthy.

Bridgecrew’s core customer base consists of rapidly expanding businesses built on cloud infrastructure, leveraging automation to enhance their cybersecurity posture.

Databricks is among the customers utilizing Bridgecrew’s flagship platform, which delivers security scanning and remediation through code across diverse infrastructure environments. The company reported a tripling of both its customer base and monthly signups in the latter half of last year.

The company has also experienced significant adoption of Checkov, its open-source infrastructure-as-code (IaC) scanner. Checkov supports Terraform, CloudFormation, Kubernetes, Arm templates, and Serverless Framework, identifying misconfigurations across various cloud infrastructures.

Checkov surpassed 1 million downloads last quarter, highlighting Bridgecrew’s strong reputation and appeal to Palo Alto Networks’ target audience.

Furthermore, Bridgecrew is actively developing additional open-source projects, which could represent another area of interest for Palo Alto Networks.

Israel: A Hub for Cybersecurity Innovation

This acquisition underscores Israel’s continued prominence as a breeding ground for innovative cybersecurity companies.

“Palo Alto Networks was founded by Israeli entrepreneurs, and Bridgecrew will be the seventh Israeli cybersecurity firm acquired by Palo Alto in recent years,” noted Avihai Michaeli, a Tel Aviv-based senior investment banker and startup advisor.

Further updates will be provided as more information becomes available.