LogRhythm parks IPO in favour of financing round

Security intelligence vendor raises $50m

Security intelligence vendor LogRhythm has raised $50m (£38m) in a financing round after shelving its IPO plans.

The funding was led by existing investor Riverwood Capital, and included participation from a number of new and existing investors.

Among the new investors was Exclusive Ventures, the investment affiliate of LogRhythm's EMEA distributor Exclusive Networks.

"We're very pleased to continue our partnership with our existing investors while also making room in an over-subscribed round for several new investors who can help our ongoing international expansion," said LogRhythm CEO Andy Grolnick.

"We are in the early stages of a fundamental market shift. Organisations around the world recognise that advanced detection and response capabilities need to be at the core of their cybersecurity strategies, and IT security budgets continue to shift in this direction from a traditionally prevention-centric set of priorities.

Dave Welsh, a partner at LogRhythm investor Adam Street Partners, told Reuters the IPO was scrapped as a result of market conditions.

"We definitely were contemplating an IPO," he said. "A lot of the original decision not to pursue the IPO [was due to] market factors.

"We thought 'let's not push this into a really bad market if we don't need to'."
Despite the change in direction, Welsh added that an IPO would be possible in the future if the market improves.

Keith Humphreys, managing consultant at market analyst EuroLAN, told CRN that vendors are leaning towards private equity investment over IPOs, partly because of the cost involved and partly because of uncertainty in the IPO market.

"I don't see anybody else doing it until the market has been proved," he said.

"The IPO market is just waiting for a success story before anybody copies it, and that success story is looking like being Nutanix at this stage."