Hack the Bank: how cybersecurity startup Hack the Box raised £45m in a recession

Raising a huge lump of investment capital is every entrepreneur’s dream. We’ve all fantasised about Deborah Meaden handing over a suitcase of cash on Dragon’s Den (even if it is fake money).

Of course, sourcing a large-scale cash injection is not as simple as designing an attractive enough flip board. It takes hard work, determination, and years of planning to achieve – particularly in the current climate.

Over the past year, investor wallets have tightened, rattled by recession fears. What was already a difficult hill to climb has developed into a mountainous trek through the Andes.

But improbable does not equal impossible. Business owners who are feeling dubious about accessing investment this year should look to those who have already planted their flag at the summit. Like Haris Pylarinos, cofounder of Startups 100 bronze medallist, Hack the Box.

The cybersecurity training provider is celebrating this month after securing a huge $55m (£45m) Series B. We caught up with Pylarinos to get the lowdown on how the team achieved this feat, and his advice for startups on how to fundraise in a bad economy.

What is Hack the Box?

Given how prevalent the topic is, most SMEs would probably consider themselves clued into the cybersecurity basics. We know it’s a smart idea to regularly change our passwords and be aware of phishing emails.

But sophisticated cyber threats are emerging at such a rapid rate that even the IT professionals are struggling to keep up. New technologies like cryptocurrencies have made it easier to launch ransomware attacks.

Resultantly, SMEs have been left increasingly vulnerable to attacks. Data from Check Point Software shows the number of UK cyber attacks shot up by 77% between 2021 and 2022.

Hack the Box CEO Haris Pylarinos knows this only too well. He launched the company after being “disappointed with the way training was being offered to businesses and consumers.”

Pylarinos began exploring ways to get up to speed on the topic way back in 2017 – that’s equal to around five decades in internet years.

The ex-systems engineer discovered that, at the time, the only available route to study up on cybersecurity was by reading. As he saw it, this was no comparison to learning in the actual field.

Taking a ‘white hat’ approach (internet-code for an ethical hacker) Pylarinos built the first iteration of Hack the Box, a gamified hacking platform that lets users level up their cybersecurity skills and defend against simulated security issues.

“It took me two and a half months to code it, and then I published it,” Pylarinos shrugs. We aren’t quick enough to hide our awe.

Don’t spend it all at once

As origin stories go, Pylarinos’ ticks all the Silicon Valley checkboxes. Like Steve Jobs sitting in his parents’ garage, Hack the Box began as a simple invention that has since ballooned into a million-dollar cyber empire.

But hundreds of others have tried to emulate this approach. How has the Hack the Box team managed it? And more importantly, how have they managed it now, in the shadow of COVID-19 and the face of an impending recession?

If there was one word to describe Hack the Box’s operational strategy, it would be cautious.

Even after our first two financing rounds, we didn't spend any of the capital.

In the current market conditions, being cautious gives you more points than it used to.

As stocks fell, overall valuations decreased and investor competition slowed. The team decided to hold off on funding – a difficult decision that turned out to be the right one.

“We stopped pursuing it, because we saw that it made no sense,” says Pylarinos. “We had to let the market stabilise before we tried to actually raise capital.”

Pylarinos does acknowledge that Hack the Box was in a slightly better position than most at the time due to an ongoing sector boom, assessing that “the good thing about cybersecurity is that it is very resilient. While we are in a declining market, and dealing with global budget cuts, the threats overall in cybersecurity keep rising. It’s evening out the equation, definitely.”

Patience is a virtue. Buoyed by its latest funding round, Hack the Box has now unveiled a bold blueprint for the years ahead – which include tripling the team in three years.

Targeting a diversified portfolio of service offerings, Pylarinos says he envisions becoming fully embedded into client operations to help assess, onboard, and upskill cybersecurity professionals.

“Generally startups [need to] start taking into account cybersecurity very early along the process,” he advises. “Because if you start from day one, [cybersecurity] is much easier. The longer you leave it, the harder it will be to implement.”

The importance of perseverance

Clearly, Hack the Box is a company that’s focussed on looking ahead. But for those who dream of such an achievement, we ask Pylarinos to revel in his successes for a moment. How does it feel to raise £45m for the business you began in your bedroom?

“I feel very proud,” Pylarinos smiles. “Relieved, also, because it was a super stressful year, and we were not helped by the market conditions.”

My number one piece of advice for entrepreneurs looking to raise finance would be, don't settle.

Today’s new and emerging business owners can take comfort in Hack the Box’s success story. It is proof that – with a pragmatic, patient, and persistent approach to fundraising – an economic slowdown doesn’t have to mean pressing pause on your ambitions.

“At Hack the Box, we teach a fighting mindset,” Pylarinos says seriously. “My number one piece of advice for entrepreneurs looking to raise finance would be, don’t settle. Persevere on the target and you will achieve it. But don’t settle.”