Arxceo Attacks Bad Traffic

Just a year after its launch, security startup Arxceo Corp. is close to clinching $1.1 million in Series B funding and is about to unveil its first product.

Chandler Hall, the companys cofounder and vice president of marketing told NDCF that Arxceo has already received checks for most of the $1.1 million, as well as commitments for the remainder. The round is expected to close next month.

Although he was unwilling to give too much away, Hall confirmed that a private equity fund contributed a large chunk of the round, along with private investors. No VCs were involved. “We think that we have got enough to get us to the next level,” says Hall.

So who are Arxceo and what do they do? The company was founded in December 2003, raised $400,000 in seed funding the following month, and now has around a dozen employees. Based in Huntsville, Ala., Arxceo’s core offering is the Ally IP1000, a security device that sits in front of a firewall and inspects Web traffic before it enters the network.

But there is one big difference between the technology used by Arxceo and some of the other security vendors, who often rely on specific data, such as a virus signature, to identify an attack. The Ally IP1000 is what is known as an "anomaly-based" system. This means the device searches for certain types of Web traffic, or more specifically, unusual behavior.One example of this is DNS cache poisoning, whereby a Web browser is redirected to a fake Website, which could be used for phishing or online fraud. The Ally IP1000 essentially looks out for the fluctuations in Web traffic associated with this type of attack, and, if necessary, can stop the traffic.

However, Arxceo is not the only startup on the lookout for bad traffic, as it is known. Woodland, Calif.-based Captus Networks Corp., for example, began shipping its IPS 4000 Series device in February 2003.

Arxceo’s Ally IP1000, however, is currently still in beta, although 12 customers are currently testing the device, according to Hall. The product will be formally launched at the RSA Security conference in San Francisco in February.

So who are the people behind Arxceo? The company’s CEO and founder is former IBM Corp. (NYSE: IBM) exec Donald J. “Don” Davidson. Prior to founding Arxceo, Davidson was cofounder of 2C Computing, which was sold to switching specialist Avocent for $22.8 million in August 2002.

Davidson is not the only former 2C Computing exec at Arxceo. Robert “Bob" Asprey, Charles F. “Chuck” Lofty, and Chandler Hall all helped set up the firm. Asprey and Lofty are now Arxceo’s CTO and CFO, respectively.Hall told NDCF that Arxceo will use its Series B funding to take the Ally IP1000 into final production mode and also build up a reseller channel. The company has decided not to sell its products direct. ”We have got good channel experience and, in a small company, the best way to keep your costs down is to sell via the channel,” he says.

The exec also anticipates a Series C round in either late 2005 or early 2006. However, he was less forthcoming on whether the company will go down the VC route for its next batch of funding. “It’s hard to tell at this time,” Hall says.

— James Rogers, Site Editor, Next-Gen Data Center Forum