IT security firms ready for an IPO boom

Investors take note: after five years of market fatigue, Wall Street is preparing to take a close look at a number of forthcoming IPOs from IT security firms. According to Red Herring magazine, the industry has suffered, as have many others, from “the increased scrutiny placed on public company operating performance, the increasing pressures on management and board members, the exorbitant cost of regulation including Sarbanes-Oxley, and the attractiveness of the M&A markets.” Nevertheless, things are changing, and with more than 700 private firms in the field compared to the fifty that are publically traded. “For companies that are able to demonstrate significant revenue growth, widespread customer adoption, and a very clear and compelling business plan, there are now public exit opportunities.” said Jonathan Silver of venture firm Core Capital Partners.

Red Herring offered an overview of the four most promising companies. They include:

BULLETS

Sourcefire: The Columbia, Maryland-based company markets open-source security software that detects and prevents intrusions on corporate networks. It filed for an IPO in October, will list on the Nasdaq, and is looking to raise $75 million.

Webroot: The Boulder, Colorado-based company makes the popular Spy Sweeper anti-spyware software and has already raised $108 million from current investors Technology Crossover Ventures, Accel Partners, and Mayfield

Fortinet: The Sunnyvale, California-based company makes antivirus and firewall products. Current investors, who have so far ponied-up $100 million for the venture, include Redpoint Ventures, Meritech Capital Partners, iD Ventures, Legend Capital/Doll Capital Management, and Acorn Campus

Qualys: The Redwood Shores, California-based company focuses on security risk and compliance management and sports $65 million in previous funding from ABS Ventures, GRP Partners, VeriSign, Trident Capital, Mercury Interactive, and Bessemer Ventures