Covelight Systems, a software startup focused on fraud detection and real-time data about users of Web applications, is being sold.
In a deal announced Monday before the markets opened, Covelight said it has agreed to be acquired by Radware in an all-cash deal worth $16 million.
Radware is based in Israel, but trades on the NASDAQ under the symbol RDWR..
Covelight had raised $9 million in venture capital since its founding in 2003. Its primary backers are Triangle venture capital firms Intersouth Partners and The Aurora Funds.
Negotiations had been under way for “the last few months,” and Covelight negotiated with several potential buyers, Chief Executive Officer Spencer Snedecor told WRAL Local Tech Wire. Covelight decided to sell rather than raise more venture funding in order to capitalize more quickly on market opportunities, Snedecor said.
“We experienced a very quick uptick in sales last year,” he explained. “We very happily found ourselves in global demand. We didn’t have the bandwidth we needed in order to meet that demand. We needed more investment to hire people, to bring them in and train them.
“We had to decide did we take six to eight months to grow on our own or do we get acquired by someone who is already in place and is a good match. Radware is a global company.”
Covelight management and employees will join Radware, and the company will operate as a Radware division in Cary.
While Covelight focused initially on anti-fraud technology, it expanded the scope of that software to capitalize on the capture of Web-based applications in real time. Covelight now helps clients not only reduce fraud, but provide data to analytics software that help companies capitalize on commerce opportunities with consumers while they are online, Snedecor said.
Radware plans to incorporate Covelight’s “Inflight” technology into its software services offerings. The companies met through working with a mutual client.
By becoming part of Radware, Covelight will have access to infrastructure, sales and marketing resources it does not have now, Snedecor said.
The acquisition is part of Radware’s plans to build what it calls a “Business-Smart Network.” By integrating Covelight technology, Radware said it can provide customers with real-time “business-event intelligence” about transactions while also protecting against fraud.
“This acquisition illustrates another milestone in the evolution of our vision from application-smart to business-smart networking and positions Radware at the forefront of an important industry trend,” said Roy Zisapel, chief executive officer of Radware, in a statement..
“Our mission has always been to make our customers’ networks more intelligent so they can extract greater business value from their data transactions, and therefore, their IT infrastructure investments," he added. "The addition of the Inflight platform, which dovetails several recent enhancements to our existing portfolio, accelerates this strategy and significantly differentiates us amongst other vendors in the application delivery market.”
