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About the Authors:
Howard Smith
Managing Director
Howard Smith has nearly three decades of experience at First Analysis, working with entrepreneurs as an investor and as an advisor on growth transactions to help build leading technology businesses. He leads the firm’s work in the Internet of Things, cybersecurity and internet infrastructure sectors. He also built the firm's historical franchises in call centers and computer telephony. His thought-leading research in these areas has been cited for excellence by the Wall Street Journal and other publications. He supports First Analysis' investments in AppDetex, EdgeIQ, Fortress Information Security, ObservIQ and VisiQuate. Prior to joining First Analysis in 1994, he was a senior tax consultant with Arthur Andersen & Co. He earned an MBA with honors from the University of Chicago and a bachelor’s degree in accounting with highest honors from the University of Illinois at Urbana-Champaign. He is a certified public accountant.
Liam Moran
Senior Analyst
Liam Moran is a senior analyst with First Analysis. Prior to joining First Analysis in 2020, he was in the executive development program with Macy's, where he was responsible for managing the financial modeling surrounding Macy's $3 billion asset-based loan, capital project valuations, and corporate forecasting. Liam graduated from Kenyon College with a bachelor’s degree in economics and a concentration in integrated program in humane studies. He was a four-year member of the Kenyon varsity swimming team.
First Analysis Cybersecurity Team
Howard Smith
Managing Director
Matthew Nicklin
Managing Director
Liam Moran
Senior Analyst
First Analysis Quarterly Insights
Evolution of network-based security favoring network detection and response
October 12, 2022
  • Cybersecurity threats have evolved to evade many of the basic building blocks of network-based security systems. We believe newer network detection and response (NDR) solutions will increasingly address these new threats and grow to become another major building block of network-based security systems.
  • Increased computing power that enables cost-effective network monitoring at scale, as well as advances in machine learning and artificial intelligence, have made NDR a powerful and accessible cybersecurity tool.
  • In this report, we provide a high-level overview of how NDR systems work and why they are needed. We also discuss key areas where NDR systems differentiate themselves, such as in decryption capabilities, and profile four key NDR solution providers.


Includes discussion of Darktrace and three private companies

A new vanguard of network-based security systems

Like an all-knowing network administrator

Historical challenges shape buyers' NDR purchase decisions

The decryption debate

Key NDR solution providers

Meeting the never-ending challenge

Cybersecurity index range-bound in deeply negative territory

Q3 cybersecurity M&A pace similar to Q2

Q3 cybersecurity private placement pace steady

A new vanguard of network-based security systems

The building blocks of effective network-based security systems continue to evolve. Firewalls and endpoint detection systems (including newer endpoint detection and response systems), which monitor and stop malicious behavior at networks' perimeters and endpoints, have been two of the most basic elements of network-based security systems. However, some threats have adapted to evade these protections, so network-based security systems evolved to include intrusion detection systems (IDSs) and network security monitoring (NSM) solutions to monitor and act on malicious data as it moves within networks. These newer solutions have also seen widespread adoption, but the growing number of successful cyberattacks and dozens of additional cybersecurity subcategories have shown organizations need still more robust and complementary solutions.

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