Horizon3 has raised $250 million in a Series E funding round, tripling the firm’s valuation from $650 million to $2 billion in the year from June 2025. The new funding was co-led by existing investors NightDragon and NEA, with participation from seven new investors and five returning backers.
These are the facts. The details provide a code for the confidence that VCs and private investors have in a firm. A key number in this code is the valuation. It sounds important – and it is – but it is somewhat tenuous, being based on assumptions rather than fact. It is based on financiers’ belief in the firm concerned.
That belief comes from the firm’s past performance, the size of market it serves, and assumptions that both performance and market will continue to grow.
Horizon3 was founded in 2019. Its founders had concluded, explains the firm’s chief revenue officer, Matt Hartley, “AI will allow attacks at a speed and scale that will render human-centric defenses inadequate – cybersecurity will inevitably evolve into machines fighting machines at machine speed.”
Since every firm in the world requires cybersecurity defenses, and – at that time – most were human-centric and potentially obsolete, Horizon3 had identified a massive market and proceeded to develop a machine solution to the machine threat: the use of AI to tackle the growing AI threat.
The solution involves friendly agents that live inside the customer’s IT network. These agents probe the network, using the same AI techniques that an attacker would use, looking for weaknesses, and effectively writing a tutor’s report card on what they find.
“Here’s how we beat your defenses,” explains Hartley, “and most critically, here’s how you can fix those weaknesses so that you can’t be attacked in the same way by bad actors using similar AI.” The idea is to fix it before falling to it.
Horizon3 now has more than 7,000 customers in diverse vertical sectors including multinational banks and healthcare, with four Fortune 10 enterprises. Its market is unlimited by geography, sector, or size of customer, and it has achieved 120% year-over-year ARR growth.
Horizon3’s revenue performance since its founding, the continuous increase in the number of its customers, and recognition that this is only scratching the surface of the full potential market size provides confidence that the company will continue to grow in size and profitability. That confidence translates into further capital injection to assist further growth.
It’s not altruism. Hartley uses the pie metaphor. “The size of the pie keeps growing, and the financiers want a larger slice of the pie.” The key figure of valuation is an assumption of the size of the pie. Given the performance of the company and the size of the market, a further assumption is that further injection of capital assists further growth to benefit the company and enrich the investors.
Of course, gaining the investment is only half the equation. The investee must now prove the assumptions are correct or it will stagnate and eventually perish to rivals.
“The predominant use of the funds will be for our go to market strategies,” says Hartley. Go to market (GTM) is the process of bringing a product to customers to generate revenue. To serve the size of its market, Horizon3 has partnered with MSPs and telcos. “Building the capacity to get out and service those various markets through those paths to market is a top priority for use of the funds we raise.”
The second use is continued investment in R&D. “AI attacks and innovation in AI never stops,” he continues. “Twenty years ago, you could build a product, go to market, and reduce or even stop R&D. That’s not the case where AI is involved. The AI threat grows hourly, if not by every minute, for the customer market. So, we will be using a lot of the funding proceeds to accelerate our R&D efforts to continue to stay ahead of these AI threats for our customers and partners.”
Equity investment is thus a dance between investors, whether VC firms or private investors or both, and the investee. Potential is the dance hall – potential revenue to benefit both parties.
We have used today’s Series E funding round for Horizon3 to illustrate and explain this dance. In this we have specifics – but the basic dance steps apply to all equity investment.
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