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Security Company Rapid7 Files to Raise $80 Million in IPO

The company tells other companies how hackers might get in by testing for vulnerabilities.


Rapid7, a data security company based in Boston, said today it will list its shares on the Nasdaq in an offering worth about $80 million.

The company had raised about $90 million in venture capital funding from Technology Crossover Partners and Bain Capital Partners and will trade under the symbol RPD. Morgan Stanley and Barclays Capital will run the offering.

Rapid7 specializes in penetration testing, which essentially answers the most fundamental questions a company could have around security: “What do I have that needs to be protected, and how well is it protected now?” Client demonstrations usually answer those two questions with “a lot” and “not very.”

While some security firms are more the cops on the beat, hired to keep things in check, Rapid7 is who you call when you want to know how the bad guys will try — and try they will — to get through whatever security measures are already in place. The firm also owns Metasploit, an open source service that’s essentially an early warning system about newly discovered vulnerabilities.

The company finished 2014 a little shy of $77 million in revenue, up 28 percent year on year, and lost a little less than $33 million. For the quarter ended March 31, it lost $7.7 million on revenue of $23.6 million which rose 41 percent year on year.

Rapid7’s filing with the U.S. Securities and Exchange Commission doesn’t include a share count — the filing authorizes a sale of up to 100 million shares — so it’s a little tricky to nail down a clear valuation.

It lists five shareholders that hold 5 percent of equity or more. Of those the biggest is TCV, which controls about 8.2 million shares, followed by Bain Capital, which controls a little more than 8 million shares. John Devine, an executive VP for sales, owns about 3.3 million shares. Alan Matthews, a co-founder and chairman, has 3.2 million shares. Mike Tuchen, a former CEO who is now the CEO of Talend, has nearly 1.8 million shares. CEO Corey Thomas has a little less than 1.3 million shares, of which about 923,000 are options.

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