The 4-year-old social media security company recently closed a $40 million Series C round, with participation from two international funds. The round brought the company’s total funding to $88 million, with big-name investors like Genacast Ventures and New Enterprise Associates Inc. It’s an impressive total for a growing Baltimore startup, as other entrepreneurs have struggled to garner large investments and attract West Coast funding.
ZeroFox has grown quickly in Baltimore. In 2015, the company only had employees in the U.S. It now has employees in six countries and customers in dozens, with plans to double the firm’s staff to nearly 300 people soon.
Foster said raising the money to support that growth can be tough.
It takes a lot of hustle and is about finding the right investors at the right time, he said. In its Series A round, ZeroFox focused on creating a marketable platform and building a good team and leadership, Foster said, and Series B was about gaining market traction and getting some West Coast money in the mix.
In the Series C round, ZeroFox added international money as the company tries to grow its foreign reach. But getting the eyes and ears of those big investors can be tricky, especially for a tech company based in Baltimore.
“Early on in my fundraising efforts, the first couple of years, I had investors tell me they wouldn’t invest in a Baltimore City company. That was tough to stomach,” Foster said. “We really thought twice about moving, to Boston or to New York or San Francisco…We did some real soul searching.”
It can be twice as hard to grow a tech company on the East Coast as in California, Foster said, and plenty of investors asked him if he would move his company out west or to New York early on.
ZeroFox ultimately opted to stay in the city and is now housed in a renovated Pabst Brewing Co. facility in South Baltimore. Foster said he wanted to keep the firm close to where the biggest business opportunities are. U.S. government organizations in Maryland and Washington, D.C., comprise the largest buyer of security software.
But convincing investors is not the only hurdle. It can also be difficult to convince recruits that Baltimore is a good place to live and work — maybe all they know about Baltimore is from the show “The Wire” — and to get them to move to the city.
“We look all over the world. We have employees in six countries. And we’ve moved employees to Baltimore from over about a dozen states,” Foster said. “But I think there’s a stigma still, that Baltimore City doesn’t always have the most positive reputation. So I typically have a double fight when I go after really good tech talent. I’ve got to convince you to come to the company, and I’ve got to convince you to come to the city.”
Companies in cities like New York and San Francisco don’t have that kind of problem attracting tech talent, Foster said. He focuses on Baltimore’s cost of living, attractions, and its sports and social scenes compared to other popular cities.
“We talk up the fact that you can buy beers for a dollar, which might seem crazy, but you can’t get that in New York,” Foster said. “We talk up that this is a sports town. Like you can live in Federal Hill and walk to the Ravens or Orioles game. San Francisco doesn’t have that. So we try to play to our strengths. But it’s still a challenge.”
If anything can “tank the tech industry” in Baltimore it’s crime, Foster said. Even with all of its perks, he said, the city still has a crime problem that can be a deterrent for employees and investors. The talent and funding pools here are not comparable to those on the West Coast.
As the Baltimore-area continues to grow successful tech companies — pointing to Tenable and Red Owl Analytics as some examples — Foster said he hopes to see that change. For its part, Foster said ZeroFox can accomplish its ultimate goal of becoming a large, publicly-traded Baltimore company, it could be part of that change and help attract more investors and techies to the region.
Morgan is a reporter for the Baltimore Business Journal. She covers technology, education and health care.Posted on