ScanSafe sale nets Balderton $55m

BALDERTON CAPITAL, the venture capital firm led by Irishman Barry Maloney, has netted $54.9 million (€37 million) from the sale of its 30 per cent stake in British web security software group ScanSafe, which was acquired yesterday by internet networking giant Cisco Systems.

Cisco has agreed to pay $183 million in cash and “retention-based incentives” for ScanSafe, in a move designed to strengthen its existing web security business. The deal is expected to close in 2010. Balderton invested in ScanSafe when the British company was founded by brothers Eldar and Roy Tuvey in 2004. It supported two further funding rounds as the web security business grew internationally, and is ScanSafe’s largest institutional shareholder. The Tuveys will remain with the business.

It is not clear how much Balderton invested in the three funding rounds, but the company is thought to have made a significant return on its investment. Based in London, Balderton was spun out of Benchmark Capital and became an independent entity in 2007.

It has stakes in a number of businesses, including betting exchange Betfair, e-payments group Payzone, online DVD and games rental company Lovefilm and Zopa, a social lending website.

In early 2008, Balderton earned $140 million by selling its 15.7 percent stake in the social networking website Bebo to AOL. That represented a ninefold return on its $15 million investment in May 2006.

The most recent accounts available for ScanSafe show it had retained losses of £9.6 million (€10.6 million) on December 31st last having recorded a loss of £1.94 million during 2008.

ScanSafe was recently named the worldwide market leader in SaaS (software-as-a-service) web security by market research firm IDC, with more than four times the share of all other named vendors. Its technology keeps malware off corporate networks and allows businesses to control and secure the use of the web. ScanSafe’s clients include Google, ATT, Sprint and Orange.

ScanSafe has offices in London and California and employs about 150 people. It has customers in more than 100 countries and was the first company in the world to offer comprehensive web security without the need for premise-based hardware or software.

Commenting on the deal, Bernard Liautaud, a board member of ScanSafe and one of the partners in Balderton Capital, said: “ScanSafe is a fine example of the type of business Balderton loves to invest in. By forming a strategic partnership with ScanSafe, and by investing through the life of the business, we have contributed strongly to the development of the company. We would like to congratulate the founders, Eldar and Roy Tuvey, for building a global leader in an exciting space.”