Amid Hacker Attacks, Security Start-Ups Garner Attention

As the number of hacker attacks swell, so do the fortunes of security start-ups.

Accel Partners, an early backer of Facebook, announced early Wednesday that it had invested $50 million in Tenable Network Security, a software maker that helps companies identify network security problems. The investment represents the venture capital firm's largest initial investment in an American company.

“We're trying to accelerate in an exploding market,” said Ping Li, an Accel partner. “Tenable is a company we've been trying to invest in for a couple of years.”

Accel's big bet on Tenable comes as other venture capital firms plow more and more money into security software start-ups and the broader enterprise market. Last year, the industry invested nearly a billion dollars into technology security start-ups, almost double the amount spent in 2010, according to a MoneyTree report produced by PricewaterhouseCoopers, the National Venture Capital Association and Tho mson Reuters.

Venture capital investors have also been emboldened by the strong stock performances of several recent enterprise initial public offerings. Those include Imperva, an Accel-backed company, which went public last November and remains more than 72 percent above its offering price. In contrast, Facebookâ€" Accel's better known investmentâ€" is trading at less than half its May offering price.

The technology security market is expected to grow in the coming years, as corporations - in response to highly publicized security breachesâ€" spend more money on patching up security holes and adjusting to the rise of mobile and cloud computing.

“These major black eyes are happening with increasing frequency,” Mr. Li said. “And its not just big companies but also smaller companies, too.”

Businesses already spend billions of dollars each year on firewalls, applications and antivirus software to keep hackers out of their systems and yet, even th e companies, like Symantec and RSA, that sell these solutions cannot always keep out hackers.

Part of the problem is that businesses have taken a piecemeal approach to security by using firewalls to keep hackers at bay and antivirus software to weed out malware. But none of these solutions communicate with each other well - a fact hackers readily exploit. When a vulnerability is detected, often it is after trade secrets have been stolen or customer data has already been exposed.

Companies are increasingly looking for security solutions that can monitor network trafficâ€" and watch for unusual activityâ€" in real time.

Founded in 2002, Tenable's software is used by thousands of enterprise and government clients, such as the Defense Department, Amazon and Apple, to scan and actively monitor networks for vulnerabilities. The company has about 15,000 paying customers, a roughly 30 to 40 percent increase from last year, according to Jack Huffard, the president a nd chief operating officer of Tenable.

Mr. Huffard said the investment would be used to expand its product line and to grow the business abroad. It also plans to double its staff, which currently stands at about 200, in the next couple of years.