By Robert J. Terry  – Senior Staff Reporter, Washington Business Journal

Key story highlights:

  • Fishtech Group is buying McLean-based Haystax Technology and will take the company to market in the commercial enterprise space.
  • “People spend a lot of time and money securing their data but they’re not using their data to drive security,” said CEO Gary Fish
  • Haystax’s security analytics platform has been used by the U.S. Department of Defense and the National Football League.

A Kansas City holding company’s deal to acquire McLean-based Haystax Technology is a bid to bring advanced analytics and automation to commercial and government cybersecurity markets.

Fishtech Group plans to make Haystax a wholly owned subsidiary and invest heavily in taking the new venture to market in the commercial enterprise space, particularly heavily regulated industries such as finance and health care. It’s also planning to enhance Haystax’s presence in federal, state and local government markets beyond its roots in homeland security and public safety.

Haystax’s security analytics platform has been used by the U.S. Department of Defense to help track terrorists. The National Football League used the platform to monitor suspicious activity and prevent cyber and physical threats at the Super Bowl. And the state of California used the technology to crunch data from earthquake sensors to predict when earthquakes might occur.

Fishtech CEO Gary Fish said the Haystax mission fits well with his company’s push to use big data, sophisticated analytics, artificial intelligence and machine learning to disrupt the security integration market, where the big vendors are focused on-premises and in networks with well-defined perimeters. In an age of cloud computing and thousands of mobile endpoints, there’s no longer really a perimeter for an organization’s data, but there are reams of insights in that data to enhance an overall security posture.

“People spend a lot of time and money securing their data but they’re not using their data to drive security. If you look in the data you can find what’s causing your security issues potentially,” Fish told me Wednesday. “Haystax brings in large amounts of log data and system data and personnel data and by letting algorithms, the machine learning, the artificial intelligence, by letting the machines sift through this they can see much more than a human could possibly find in the data.”

The two companies know each other well. Fishtech invested $4 million in Haystax in December 2016. When it came time to consider additional investment, Fish decided the better course was to acquire the company, which has about $10 million in annual revenue. He wouldn’t disclose the transaction’s terms but said he expects Haystax to grow 30 percent to 40 percent annually and continue to add to its 50-employee headcount.

Fish will be CEO of Haystax while Pete Shah, the former chief revenue officer, will become COO.

Haystax was launched in 2013 when private equity firm Edgewater Funds acquired two Northern Virginia companies, Digital Sandbox Inc. and FlexPoint Technology LLC, and set out creating a cyber platform for defense, intelligence agency and commercial clients. Edgewater had linked up the year before with Bill Van Vleet, a cyber exec with ties both here and in California, to build a next-generation intelligence company. Van Vleet was previously CEO of Applied Signal Technology Inc., which he sold to Raytheon for approximately $500 million.

Fish said Edgewater will stay on as a minority owner.

Last month, two local cyber startups unveiled Series B venture funding rounds of $20 million or more on successive days, underscoring the market opportunity at a time of increasingly complex threats by well-organized nefarious actors, often state-backed. Upstarts maintain the established players can’t address cyber threats well or don’t measure up to what customers want — but it’s also, critics say, ushered in a lot of the noise in the market courtesy of companies that are long on marketing but short on technology that does what it says it does.