Speaking to a group of investors last year, Poppy Gustafsson stated: “An attack, once thwarted, needs to remove all the tassels of infection.”
The chief executive officer of cybersecurity group Darktrace, one of the UK’s most popular start-ups, said: “This is a task that is labor intensive and prone to human error and error. not alert enough.
The news this week that tech-focused private equity group Thoma Bravo is considering buying Darktrace privately is a vote of confidence for a company grappling with some skepticism about its upside prospects. growth as well as the risk to its reputation. proved difficult to remove.
Two of the company’s founding investors were found to have fraudulently inflated the value of their companies in the largest case of its kind in British history.
Mike Lynch and Sushovan Hussain were accused of falsifying facts and financial documents in the 2011 sale of Lynch’s software company Autonomy to Hewlett-Packard for $11 billion. Hussain was found guilty and found guilty. 5 years in prison in the US.
In January, Lynch lost a high-profile civil lawsuit brought by Hewlett Packard Enterprise, the judge finding civil fraud against him and Hussain. British Home Secretary Priti Patel has approved the extradition of Lynch – who denies any wrongdoing – to the US to face charges.
Gustafsson outlined a route between protecting his former colleagues while attempting to distance himself and the company from the founder of Autonomy and the potential deterioration of the association’s reputation.
She provided written and cross-examined testimony during Lynch’s civil fraud trial, and she wrote a letter to the judge defending Hussain, describing him as a close friend. . Darktrace did not respond to a request for comment on her defense.
Lynch, who was a director of Darktrace until 2018 and an adviser until 2021, still owns around £158m in stock.
Technology investor Michael Dimelow said he believes Darktrace’s association with an executive infected with fraud is “a drag” on the company’s reputation and investor confidence. But he added that Gustafsson was “a sound person” and “seemed to have performed”.
A career in cybersecurity and a rapid rise in the UK tech ranks was not an obvious destination for Gustafsson. The 39-year-old grew up in Cambridgeshire, where her father ran an agribusiness and her mother worked as a reporter for Farmers’ Weekly. After studying math at the University of Sheffield, she trained for a certificate in accounting at Deloitte.
But it was the next job that would define her career – three years as a corporate controller at Autonomy.
Hussain and Lynch and several other former Autonomy executives founded Invoke Capital in the summer of 2012, a year after Autonomy’s ill-fated purchase of HP. Darktrace was founded the following year by a number of British mathematicians and spies from MI5 and GCHQ. Call the seed sponsor company and help attract some former Autonomy employees to run the program.
Appointed CFO of the fledgling startup at the age of 30, she was soon promoted to co-CEO of Darktrace in 2016 and then CEO in 2020. awarded the OBE in 2019 and guided the company through its successful public listing last April.
Founded in Cambridge, Darktrace often uses the immune system as an analogy to describe its cybersecurity software, which uses artificial intelligence to identify new threats and attack defeat them. The company, whose customers include Rolls-Royce, Drax, the city of Las Vegas and the UK’s NHS, has capitalized on the thriving cybersecurity market in recent years.
A former Darktrace employee said that Gustafsson “didn’t believe it when he heard about the barriers and then gave up on everything”.
A longtime investor in the company described her as “very kind”, adding: “Poppy isn’t too aggressive – she’s soft. . . but she ran that vending machine to make it super efficient.”
Darktrace has posted strong growth over the past five years, with revenue growing from $79.4 million in 2018 to $417 million last year. It currently has about 7,400 customers, most of them small and medium-sized companies.
But not all are convinced. Last October, shares plummeted after brokerage Peel Hunt published a note claiming the company was worth half its market cap, as the potential market the company targeted was not large. as the company claims.
News of preliminary discussions with Thoma Bravo helped it recover. Shares have rallied 28% since then, while shares have gained 64% since the IPO.
Some are still skeptical. British hedge fund ShadowFall, which has a short position in the company, also believes that Gustafsson continues to overestimate Darktrace’s potential client base. Last year, she announced more than 150,000 companies would benefit from Darktrace’s Immune System AI software.
Matt Earl, managing partner at ShadowFall, said: “We struggle to satisfy ourselves that Darktrace is investment grade.
Some former employees have criticized what they see as an aggressive sales and marketing strategy. ShadowFall and its competitors have also questioned why Darktrace spends so much less on research and development than some of its peers.
Rival cybersecurity firm Vectra mocked Darktrace last year on a now-deleted website claiming that “instead of investing in innovation, Darktrace spends it on F1 sponsorship and ingenious marketing campaigns.” “. It added that Vectra spends about 40% of its revenue on R&D, compared with 10% for Darktrace.
A person close to Darktrace noted that the nature of the company’s AI means it doesn’t require a large and expensive engineering team.
The investor argues that “recalcitrant British investors” rarely correctly value tech stocks and that Darktrace is undervalued by the market. They added: “I hope that the Thoma Bravo thing does not happen because I think there is much to the contrary, but at least it will wipe their vehicles from Autonomy.”
