Montréal-based Flare has raised $30 million USD ($42.5 million CAD) in Series B financing to scale its cybersecurity threat monitoring software in North American and European markets.
The all-primary, all-equity round was led by San Francisco firm Base10 Partners, with Québec-based backing from Fonds de solidarité FTQ and returning investors Inovia Capita and White Star Capital, along with what the company called some “minor” undisclosed investors.
Flare generates reports of potential threat activity on the dark web for security teams to monitor.
Flare says its software automates digital threat monitoring by trawling the open internet and the dark web for cybercrime, like the theft of company credentials or data leaks. The dark web, the epicentre of anonymous and criminal activity online, includes content that is not accessible through standard search engines and requires specialized software or permissions to access.
With the new funding, the company plans to scale its market efforts in North America while investing in EU expansion. Flare CEO Norman Menz added in an email that the financing will also help grow his team of 100 while improving its product through artificial intelligence (AI) integration.
Stealing login credentials has become a more common method of cybercrime than good old-fashioned break-ins, Menz told TechCrunch. In response to this evolving threat, the company has rolled out a feature that detects leaked login information and proactively resets passwords before bad actors can use them.
RELATED: Flare Systems eyes US expansion following $9.5 million Series A funding
Flare claims its software sets it apart from competitors in the threat exposure management space because of its expansive dataset, including from sources like darknet marketplaces, leak and dump websites, and private Telegram rooms.
Through its new Threat Flow feature, Flare’s platform generates reports of potential threat activity on the dark web for security teams to monitor. The tech is based on research conducted by Flare in collaboration with the School of Criminology at the Université de Montréal and Complexity Science Hub using the OpenAI GPT-3.5 Turbo large-language model (LLM). The resulting published white paper analyzed 500 conversations from three cybercrime forums and claimed using an LLM to detect threats was accurate 98 percent of the time.
The startup was founded in 2017 by COO Yohan Trépanier Montpetit, CTO Mathieu Lavoie, and chief architect Israël Hallé, previously a developer at Shopify. In 2022, the company raised a $9.5-million CAD Series A to expand into the US. The new financing brings the company’s total raised to at least $53 million CAD.
White Star and Inovia were both previous investors, but Base10 Partners is a new addition that Menz said Flare encountered late in the fundraising process, adding that their values “resonated brilliantly” with Flare’s team culture.
Though Flare’s software began as a cybersecurity tool for financial institutions, the company’s client base has now expanded to the health, pharmaceutical, and tech sectors.
RELATED: NCC commits $22.8 million to 37 cybersecurity projects
Despite growth in the cybersecurity tech sector, human error remains a leading threat to data security. A 2022 federal report found that 93 percent of data breaches among public servants were due to humans mishandling data. And with the rise of LLM use, more sensitive data is being inputted into chatbot prompts.
Despite concerns about whether employees are using AI securely at work, there is some indication that AI tools can effectively reduce cybersecurity risks. A recent IBM report found companies that automated some cybersecurity operations spent an average of $2.84 million CAD less per year on resolving data breaches and resolved them more quickly. Now, 61 percent of Canadian companies are using some kind of AI or automation tool to prevent cybersecurity breaches.
The federal government has also taken notice of the trend. In October, the National Cybersecurity Consortium committed $22.8 million to put government money toward 37 cybersecurity projects.
Feature image courtesy Vadim Daniel Photography.