The data storage giant EMC said Tuesday that it had acquired Silver Tail Systems, an antifraud start-up.
EMC did not disclose the price for Silver Tail, which is based in Menlo Park, Calif. But it has acquired a number of security start-ups in the past few years as it expands beyond its core business of data storage. Its largest acquisition was the 2006 takeover of RSA Security for $2.1 billion. Last year, it acquired NetWitness, another security start-up. That price was never disclosed, but people close to the acquisition talks said NetWitness sold for $400 million, more than 10 times its 12-month trailing revenue.
EMC is not the only tech giant chasing security start-ups. Earlier this year, Apple, which typically avoids triple-digit million-dollar acquisitions, acquired AuthenTec, a security start-up, for $356 million, its second-largest acquisition to date. Meanwhile, venture capitalists are pouring millions into security start-ups: They collectively invest ed $935 million in computer security start-ups last year, almost double the $495 million they invested in 2010, according to a Moneytree report.
Before founding Silver Tail four years ago, Mike Eynon and Laura Mather worked for three years on the antifraud teams at eBay and PayPal, two of the most targeted sites on the Web. From they learned they started Silver Tail, which searches for online fraud in real time. The company maps out what normal behavior is at a Web site and uses that intelligence to spot for anomalies, like a hacker breaking in, or large volumes of transactions coming from a single computer.
Mr. Eynon and Ms. Mather founded Silver Tail with an initial $2 million in backing from Leapfrog Ventures, Seraph Group and Startup Capital Ventures. Last year, the company received another $20 million from those investors as well as Andreessen Horowitz and Citi Ventures, the venture arm of Citigroup.
Scott Weiss, the partner at Andreessen Horowitz who led the investment, said that in the last year, Silver Tail had grown to nearly 100 employees, from 12, and that the product was being used by several top American banks. He added that the experience of the start-up's founders at eBay and PayPal has resonated with banks, e-commerce companies and government agencies.
