Veracode Lands $40 Million in Funding From Wellington Management

Veracode, a software security company, said today it raised $40 million in new funding, and its CEO says it has begun exploring an initial public offering, which could happen as early as next year.

Based in Burlington, Mass., Veracode is a cloud service that basically looks at an application from the inside out for security weaknesses and can also examine software from the point of view of a potential attacker to see how it might be compromised. It aims to help software developers bake security into the apps they create so that they’re less likely to have to go back and fix things later after a vulnerability has been found — or worse, after an attack.

CEO Bob Brennan said the new funding will give Veracode the flexibility it needs to consider an IPO, perhaps as soon as next year. “We’re growing fast, we’re preparing to go public, and we’ve penetrated only about one percent of our potential market,” he said in an interview.

Now that companies large and small of every type are starting to flex their own software development muscles in order to automate their routine business operations, securing the applications they create and buy has become a big concern. Increasingly, those apps are running on mobile devices, and more often than not touching sensitive data. Veracode wants the security of that data to be in every app’s DNA.

“We’re going after the top 2,000 companies in the world, and so far we’re in fewer than 200 of them,” Brennan said. “They know they have an acute problem to solve, but they’re just getting going on this.”

Private equity firm Wellington Management led the investment, with other existing investors participating. Prior investors include Meritech Capital, Symantec, In-Q-Tel and Atlas Ventures. Total capital raised is now north of $114 million, and it’s Veracode’s eighth investment round.

Wellington has been increasingly active in investing in late-stage tech companies. Last month, it participated in a funding round at the wireless security company Lookout. In June, it participated in a $1.2 billion round for car-hailing app Uber. In April, it participated in a $225 million late-stage round at Pure Storage. It has also invested in New Relic.

CTO Chris Wysopal founded Veracode with Christien Rioux, chief scientist, in 2006. (Wysopal talked about the company’s capabilities in detail in an interview with Re/code earlier this year.) They spun it out of @Stake, a security consulting firm that had been acquired by Symantec.

This article originally appeared on Recode.net.

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