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Datto Acquires Infocyte; MSPs Gain MDR, EDR Security Services

Datto has acquired Infocyte, a provider of endpoint detection and response (EDR) and managed detection and response (MDR) services as part of the MSP technology provider's deeper march into the cybersecurity market. Financial terms of the deal were not disclosed.

This is technology M&A deal number 90 that ChannelE2E has covered so far in 2022. See more than 1,000 technology M&A deals for 2022, 2021 and 2020 listed here.

Datto Acquires Infocyte: MDR, EDR and Threat Hunting for MSPs

In addition to Infocyte's security technology, the company has analysts in a Security Operations Center (SOC) who can respond in real-time to escalated cyberthreats, Datto indicated.

Moreover, Infocyte has a range of partnerships to help safeguard critical infrastructure, according to MSSP Alert. For instance, Infocyte and CyberDefenses (an MSSP) in 2020 unveiled Election Security Assessments. Also, global consultancy Grant Thornton leverages Infocyte to safeguard Amazon Web Services (AWS) environments for end-customers, the businesses said in 2019.

Ahead of the Datto deal, Infocyte had been venture-backed -- having raised $5.2 million in Series B funding from Toba Capital, LiveOak Venture Partners, and Feik Enterprises in 2018.

Within the MSP security market, the Datto-Infocyte deal counters Barracuda's buyout of Skout; ConnectWise's Perch Security acquisition, and Kaseya's RocketCyber acquisition. All of those deals compete in some ways with Huntress and other businesses that offer MDR to MSPs.

Datto Buys Infocyte: Executive Perspectives

Tim Weller, CEO, Datto
Tim Weller, CEO, Datto

In a prepared statement about the deal, Datto CEO Tim Weller said:

“Datto has always focused on enabling its MSP partners to secure the digital assets – both applications and data – of their Small and Medium Business (SMB) clients. The addition of the Infocyte team and technologies augments our capabilities within the critical Protect, Detect, and Respond stages outlined in the NIST organizational security framewor. Infocyte’s offerings are complementary to Datto RMM Ransomware Detection and SaaS Defense application security products in those same NIST stages.

In 2022, we will continue to leverage the power of our Datto RMM platform by fully integrating Infocyte’s patented technology, further securing endpoints and fortifying this key first line of defense for MSPs. Today, we welcome the Infocyte team, who will join us in developing our rapidly expanding set of MSP-delivered security offerings. MSPs are squarely in the security business, so Datto continues to make security a top investment focus.”

Added Curtis Hutcheson, CEO of Infocyte:

“We look forward to joining Datto and to further securing the SMBs and other clients served by its vast network of MSPs around the world. Securing endpoints from advanced threats continues to be a top challenge for SMBs. With Datto’s partner community and growing security portfolio, we will be able to dramatically expand our reach to millions of endpoints under management, enabling Datto’s partners to provide their SMB customers with leading detection and response technologies.“

Datto Business Evolution, Continued MSP Partner Focus

Ahead of the Igfocyte acquisition, Datto has been extending from its cloud-managed storage appliances, RMM (remote monitoring and management) and PSA (professional services automation) software toward more public cloud solutions.

The effort includes launching Datto Continuity for Microsoft Azure, and acquiring BitDam to further secure Microsoft 365, Google Workspace and other systems from ransomware, malware, and phishing.

Ryan Weeks, CISO, Datto

Rob Rae, SVP, Datto

On the security front, Datto CISO Ryan Weeks and the security team have aggressively addressed MSP industry security threats and continually educate the market about risk mitigation. One recent example: The company released a tool to protect MSPs from the Log4j vulnerability when that software risk surfaced in December 2021.

Datto Ownership, Financial Performance, Competition: Datto has been publicly held since October 2020, and private equity firm Vista Equity Partners remains a major shareholder in the business.

Datto’s revenue was $157.9 million in Q3 of 2021, up 21 percent from $130.7 million in Q3 of 2020, the company announced in November 2021. At the time, the company said it supports 18,000 MSPs. Datto over the past decade has built and expanded an MSP partner organization. Senior VP of Business Development Rob Rae has been instrumental in that strategy and execution.

Datto generally competes against entrenched MSP technology suppliers such as ConnectWiseKaseya and N-able; growing platform providers such as NinjaOne; MSP software upstarts such as and Syncro MSP; and dozens of data protection and security companies that now engage MSPs.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.