Security & Fraud

Big Banks Back Startup Menlo To Fight Phishing

With a new cyberattack hitting the news on what seems to be a weekly basis, financial heavyweights are investing millions of dollars into a cybersecurity startup that aims to paralyze phishing attacks.

According to Fortune, several big banks – including JPMorgan & Chase, American Express and HSBC – are among the investors in a new $40 million round of funding for Menlo Security. Other investors include Ericsson Ventures, General Catalyst, Sutter Hill Ventures, Osage University Partners and Engineering Capital.

Four-year-old Menlo, based in Menlo Park, California, protects customers through an approach it calls “web isolation,” which involves the company opening all emails, documents, attachments and websites in a virtualized environment and then mirroring an image of the content back to end users.

This approach ensures that the “active” content, capable of stealing passwords or running potentially malicious programs through a browser, never has a chance to touch an employee's computer, even after it has been opened.

“The idea is if you never let anyone connect to outside content, you can stay clean,” says Menlo CEO and co-founder Amir Ben-Efraim, who previously worked at Check Point Software Technologies, an Israeli cybersecurity firm, and founded Altor Networks, a data center security company that was acquired by Juniper Networks for $95 million in 2010.

“Menlo’s isolation platform provides a seamless user experience,” said Harshul Sanghi, managing partner at American Express Ventures, whose parent bank is also a customer. “The technology doesn’t allow any active content to touch the end point – nothing.”

American Express’s venture capital arm has invested in other financial tech and security firms, including fraud fighter Signifyd, mobile security firm InAuth (acquired by the bank for an undisclosed sum last year), data miner Enigma and identity verifier Trulioo.

Phishing has grown to be one of the most common threats to businesses across industries and geographies,” said Rick Smith, head of private investments at JPMorgan. Smith praised Menlo for “helping to eliminate phishing attacks without disruption to our business.”

Menlo has doubled its head count over the past year, to about 125 employees. The latest round of funding will be used to expand internationally in markets like Asia and Europe. The company has raised about $85 million to date.

“We’re not playing a cat-and-mouse game with malware anymore,” Ben-Efraim said.

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