Application Security Firms Win InvestmentsApplication Security Firms Win Investments

Two application-security vendors raised millions in capital Tuesday, and security analysts say the investments show the application security market is here to stay.

Web application-security maker Kavado Inc. received $10 million in third-round funding today, bringing its total funding to $18 million to date. This round, Kavado's largest to date, was led by Pequot Ventures. Previous investors, including Banc of America Equity Partners, Neurone Ventures, and 3i Group, also participated in this round.

Web application gateway maker NetContinuum Inc. also received roughly $1 million in additional funding today from Siemens Venture Capital GmbH. NetContinuum has secured more than $55 million since the company's founding in 1999.

Known as "application firewalls," NetContinuum's NC1000 gateway and Kavado's InterDo protect Web applications from hackers who attempt to bypass other security measures, such as a network firewall, and trick their way into systems by exploiting security weaknesses within applications.

"The market is responding to this obvious need," says Eric Ogren, senior analyst at Yankee Group. "It's a healthy sign that this technology solves real problems and is getting traction. Companies don't get funding like this if they're not getting good results and have healthy pilots under way."