Blackberry, the Canadian tech company behind the coolest phone of 2009, has agreed to acquire AI and cybersecurity specialist Cylance from a host of VC and PE backers for $1.4 billion in cash. The deal comes just five months after Cylance raised upwards of $120 million in new funding, and nearly two-and-a-half years after it brought in $100 million at a $1 billion valuation.
Both of those fundings were led in part by Blackstone, marking rare forays into venture capital for the private equity-focused firm. Since the start of 2008, Blackstone has made VC investments in just 21 different companies, according to the PitchBook Platform, an average of less than two per year. Nearly 69% of those VC deals over the past decade have been in the IT sector, demonstrating a clear focus when the firm does dip its toes into early-stage waters.
Cylance has another high-profile PE backer as well, in the form of KKR. While its ventures into venture haven’t been quite as rare as its New York neighbor’s, KKR has provided VC backing to only 35 companies since the start of 2008, again per PitchBook data. And like Blackstone, KKR has its eye on software startups, with more than 41% of its VC deals over the past decade-plus occurring in that space.
In all, Cylance has raised well over $300 million in VC funding, with its other prominent backers including DFJ Growth, Insight Venture Partners and Khosla Ventures. Founded just six years ago, the company uses AI and machine learning to make cybersecurity software more effective at sniffing out threats. It’s based in Irvine, CA, with other offices in Europe and Japan.
Blackberry, for its, part, has changed tack over the past decade, shifting away from creating phones and other hardware and toward security and other enterprise services. And the move seems to be going well: The company recently reported $210 million in quarterly revenue, while revealing at the same time $2.4 billion in cash reserves. Cylance, apparently, was worth dipping into that nest egg.
While Blackstone’s venture investments are infrequent, this is actually the second exit in quick succession for the firm, following the IPO in May of Carbon Black, another cybersecurity provider. Overall, 2018 has been packed with high-profile cybersecurity exits across VC and PE, with the $2.35 billion acquisition of Duo Security by Cisco and Thoma Bravo‘s $1.6 billion buyout of Barracuda Networks serving as two other notable examples.
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