Goldman Sachs Acquires Bot Mitigation Company White Ops

American cybersecurity company, White Ops, a global leader in bot mitigation, bot prevention, fraud detection platform that protects enterprises and online platforms from automated attacks, announced it has been acquired by Goldman Sachs’ merchant banking division, in partnership with ClearSky Security and NightDragon. The acquisition will further accelerate White Ops’ growth and expansion in new markets. This news follows an investment the trio made in White Ops in May.

Founded in 2012, New York-based White Ops uses threat intelligence and machine learning to detect malicious bots that impersonate human behavior. Bots have become increasingly sophisticated over the years, adapting and shape-shifting to become more like humans. But these advances can be put to nefarious ends, including “click fraud,” when bad actors automate taps on “pay-per-click” (PPC) ads to increase site revenue, for example.Back in 2017, White Ops and other tech companies, such as Google, were involved in what was thought to be one of the FBI’s biggest-ever ad fraud investigations.

Terms of the transaction, which follows Goldman Sachs’ and ClearSky’s initial investment in White Ops earlier this year, were not disclosed. The business was acquired from previous investors Paladin Capital Group, Grotech Ventures, and other shareholders. Bots are also often used in “imitation attacks” that attempt to access people’s accounts through credential stuffing.

To combat automated bot-based attacks at scale, automation is the only meaningful recourse. And such tools are in high demand, with the broader online fraud prevention market currently pegged at $21 billion, a figure that is predicted to almost double within five years. Numerous other players operate in this space, including Shape Security, which reached a $1 billion valuation before it was acquired this year by application delivery networking (ADN) giant F5.

White Ops had previously raised $31 million, according to Crunchbase data, and the company said it had grown its customer base by 40% in the past year. With Goldman Sachs as one of its principal owners, White Ops is in a strong position to expand “into new vertical markets” across the enterprise.

White Ops Security Platform Details

White Ops’ Fraud Mitigation Platform focuses on Application Integrity, Marketing Integrity, and Advertising Integrity.

White Ops technology protects enterprises from bot attacks and fraud across the domains of cybersecurity, digital advertising, and marketing. The company’s customer base grew by 40 percent in 2020, though actual revenue and profit figures were not disclosed. Also, 2020 headcount by 25 percent to 170 employees, White Ops says.

In a prepared statement about the M&A agreement, Tamer Hassan, CEO and co-founder of White Ops, said:

“Goldman Sachs, ClearSky, and NightDragon are ideal partners to support the next phase of the Company’s evolution and growth across multiple markets, use cases and geographies. Their continued support of our mission to disrupt the economics of cybercrime, global network of relationships, and market expertise provides a very strong foundation to execute on our vision to enable collective protection for the internet.”

White Ops Acquired: Buyer and Investor Perspectives

Added Anthony Arnold, managing director at Goldman Sachs:

“We have been very pleased with the Company’s performance since our initial investment and we’re delighted to build on our current partnership, especially as White Ops continues to benefit from consumers’ shift to digital and clients increasingly require protection. We look forward to supporting management in their next phase of growth.”

Noted Matthew Popper, managing director at Goldman Sachs:

“White Ops’ highly differentiated technology platform and scaled signal collection footprint help its clients protect against a wide range of sophisticated fraud types. We look forward to working with management and our partners at ClearSky and NightDragon to accelerate the Company’s expansion into new markets.”

Added Jay Leek, managing partner of ClearSky:

“As fraud and abuse become increasingly prevalent across the digital ecosystem, enterprises and internet platforms require sophisticated threat protection now more than ever. White Ops has proven that it can stop fraud and abuse at tremendous scale. We have spent a lot of time with their leadership team over the past year and have been impressed with the strength and quality of their platform. We look forward to partnering to continue to build on the Company’s’ leadership position in the industry.”

Concluded Dave DeWalt, founder and managing director at NightDragon:

“Through our experience in engaging with hundreds of enterprises and their cybersecurity teams, we know that automated attacks on applications creating fraud and abuse is a critical point of risk to every security and marketing team. We look forward to partnering with the team at White Ops to help clients across a range of industries.”

Multiple companies advised on the deal — including:

• Morgan Stanley acted as financial advisor to White Ops, and Cooley LLP provided legal counsel.
• The buyers were advised by Momentum Cyber, along with Sullivan & Cromwell LLP and Wilson Sonsini Goodrich & Rosati.

Goldman Sachs Cybersecurity Investments

Goldman Sachs has been busy in the cybersecurity market and IT services markets. The investment firm’s recent investments include:

• October 2020: Deepwatch, an MSSP with MDR, endpoint security & vulnerability management services.
• August 2020: Infostretch, an IT consulting & digital transformation firm.
• September 2019: Data protection software provider Acronis.

Goldman Sachs has also shed some cyber assets in recent years.