Cybersecurity Firm Darktrace Looks To Revitalize London’s IPO Market

Founded in 2013 by former intelligence agents and Cambridge-based mathematicians, Darktrace may sound more like a Jason Bourne sequel than a publicly traded company.

On Monday the cyber-security firm went into the opposite of stealth mode, announcing an IPO on the London Stock Exchange with a target valuation of $4 billion.

The deal comes with a smidge of irony, one of Darktrace’s largest backers is facing enhanced scrutiny thanks to allegations of fraud and potential extradition to the U.S.

Tech’s 007

Customers from Coca-Cola to Rolls-Royce trust Darktrace for its artificial intelligence technology that can detect irregularities in IT infrastructure and thwart cyberattacks.

• As attacks have grown more sophisticated, it’s seen a windfall of clients looking for protection – sales grew at a 58% compound annual rate between 2018 and 2020.
• Darktrace’s IPO, which could raise between $350 million to $400 million, will go towards hiring software engineers and expanding its R&D operations in Cambridge, U.K.

Darktrace has one big skeleton in its past, though. Its biggest investor is Invoke Capital, a venture fund run by famed U.K. entrepreneur Mike Lynch, who the country’s press once dubbed “Britain’s Bill Gates.” Lynch was arrested in London in February and is currently on bail:

• HP, which acquired his software company Autonomy for $11 billion in 2011, alleges Lynch masterminded an accounting fraud to make the company’s books more attractive in the sale.
• Darktrace’s CEO Poppy Gustafsson and Chief Strategy Officer Nicole Eagan both used to work at Autonomy and the company shares an office building with Invoke in London, but said Lynch has no direct involvement with day-to-day management.

Deliveroo Didn’t Deliver Darktrace’s London IPO plans come on the heels of Deliveroo’s disastrous debut in the English capital. The food delivery service has slumped around 35% since trading started, with investors skittish about its gig-economy model and dual-class share structure.

the takeaway

Darktrace says it will not be a replay of Deliveroo because of its traditional listing, rather than a dual-class structure. “I love Deliveroo,” said Gustafsson. “I think it’s great. I can get my favorite burrito delivered on a bicycle. But this is different.”