Nozomi Networks Acquired by Mitsubishi Electric for ~$1 Billion

M&A marks a milestone, signaling the close of one chapter and the transfer of success from one shareholder base to another with new expectations. It is both an ending and a beginning, reshaping what growth and value mean for the company. Some deals unfold quietly, absorbed without much notice, while others reverberate across industries, forcing competitors and markets to respond. The best deals send thunderous shock waves across industry and create a new standard of excellence for the market.

For many reasons for the industry, for Energize Capital, and for me personally – the Nozomi Networks acquisition announced today by Mitsubishi Electric Co. is a lightning bolt of excitement. This transaction will send positive reverberations for years to come as an example of extreme success at the intersection of software and climate/industrials. While the personal excitement is more a subjective milestone, here are some objective details:

• this is the largest acquisition of an OT/IoT company in history
• this is the largest cybersecurity acquisition by an industrial OEM company
• this is the largest disclosed acquisition by Mitsubishi Electric

Big numbers today… but this team will continue to aim higher within the Mitsubishi Electric framework.

How did we get here?

Juan Muldoon and I first evaluated the OT cybersecurity space back in 2017 and uncovered a rare gem of a team based out of Mendrisio Switzerland that had a product and customer obsession. We led a $15M investment, joined by our friends at Notable Capital, Lux Capital, and Planven. Nozomi Networks and the team are especially personal to me because this was my first investment/ portfolio company at Energize; I’ve been on the board since the investment and have witnessed the highs and lows of company building. Today marks the outcome of hard work and that journey. The best part of the story is the people: the cofounders are some of the kindest in the world. At Energize we say “family first” is our most important ethos. Andrea Carcano and Moreno Carrullo are the cofounders of Nozomi Networks and their quality as people has set a standard that makes it hard for other cofounders to match. The cofounders are 2 parts of a 3-part “three amigos” narrative with the 3rd member being CEO and very early employee, Edgard Capdevielle. Edgard describes himself as teflon- but that is only part of the story. Yes, he was a ruthlessly efficient operator, but he also is a visionary. He saw the opportunity to define a category and use his experience and management skills to create a world-class organization. And, he did just that.

We invested in Nozomi at ~10 employees and around $1M in revenue. Next year the revenue figure will cruise through $100M and the company will be a/the top OT cybersecurity company on the planet.  The industrial technology landscape is not an easy customer base to win over- these are engineers testing the software product at every step… marketing is not enough; product leadership wins. Nozomi’s commercial scale in a tough market is proof that leadership and strong product can crack even the toughest market. And, at the other side of that battle is an amazing outcome.

When Energize joined the investment I quickly gained two friends and mentors in Glenn Solomon from Notable Capital, and Bilal Zuberi from Lux Capital. Both men are legends of the technology landscape and my learnings from them were immeasurable. It’s been a real treat being involved with them here.

I am also posting two important photos: 1 from when I first visited Mendrisio in 2017 and spoke with the (small) Nozomi team- back in 2017. And a second photo from a month ago where the cofounders and I assembled for an identical layout. We look great, just a bit older. The only sad part of this story is that the Energize-Nozomi chapter now ends. But I hope and expect the relationships to find new avenues over the years to come.

 

A few weeks ago, in Mendrisio, we recreated my photo with the first 10 Nozomi employees that I took in 2017. We aged a bit, but it was a great journey. A link to the WSJ article on the transaction is here.