Norse Corp. generated buzz with provocative threat reports but now appears to be on its last leg. Its downfall could signal that investors are cooling on the once-frothy cybersecurity market.
For a firm that has all but closed shop, Norse Corp. had a strikingly high-profile presence at last week's RSA Conference, the cybersecurity industry's premier annual gathering in San Francisco.
Last month, influential cybersecurity blogger Brian Krebs broke news that Norse had run out of money, fired most of its employees, and was dangerously close to collapsing. It was a stunning turn of events for the Silicon Valley startup that had raised some $25 million in venture capital and generated headlines with its flashy and provocative reports on international cyberthreats and digital crime syndicates.
For this year's RSA Conference, Norse paid some $90,000 to put its logo on this year's RSA badge that hung on the necks of more than 40,000 attendees. But instead of dazzling conference-goers with its latest products and technology, Norse was a conspicuous reminder that the exuberance that investors have shown for both early-stage cybersecurity firms and public companies is quickly cooling.
Recommended: Opinion: Security firm’s Iran report mostly hype
"It's not enough to have the word cyber in your name," said Eric Davis, a partner at the investment firm America’s Growth Capital.
Indeed, Wall Street is approaching digital security firms much more cautiously. Stock prices of publicly traded firms have fallen precipitously in the past six months. FireEye, a bellwether of sorts among a new breed of security companies, is down almost 60 percent from this time last year. The firm Rapid7, which generated plenty of investor excitement when it went public last July, is down 43 percent from the closing price from its opening day of trading.
An issue facing many security firms is redundancy in the marketplace, said Wendy Nather, research director at the Retail Cyber Intelligence Sharing Center and a former industry analyst. When it comes down to it, she said, company chief information security officers, or CISOs, are drowning in too many security products.
"CISOs are tired of endlessly layering products one on top of the other, and are taking a hard look at their portfolios to see what they can reduce," said Ms. Nather.
