Top 10 security companies to watch

These are tricky times for enterprise security start-ups.

Breaking into this vast and diverse technology market means more than just having a good product; newcomers need to bring revolutionary technology, an elegant resolution to a vexing problem, an offering that integrates unusually well with the world around it - something to distinguish it from the crowd. At the same time, security is such a strategic issue for enterprises that few are willing to put their money behind a young company that doesn't already have a few Fortune 500 entries on its customer list.

"In security, you want to be the best. There aren't many customers out there that will brag they have the second-best security solution," says Mark Levine, managing director with Core Capital in Washington, D.C.

Security start-ups also are challenged by the existence of a few behemoths -including Symantec, McAfee and Trend Micro - that dominate the market and often eclipse best-of-breed, point solutions with the promise of one-stop shopping for multiple security needs.

In addition to start-ups with revolutionary technology, some young companies are turning heads because security is at the heart of their products even though the function of the products is to perform something unrelated.

"We didn't view this as an investment in a security start-up but in unstructured data management; the fact that the company does encryption was a byproduct," says Craig Gomulka, a director with Draper Triangle Ventures in Pittsburgh, which invested in BitArmor. "But the encryption is the enabling technology; without that base you wouldn't be able to do this."

Below are 10 security companies we think are worth watching. Some are new to the market, others have reinvented themselves recently, still others are just beginning to make their mark on the corporate mind-set. All of them are worth keeping an eye on.

BitArmor Systems

Founded: 2003

CEO: Patrick McGregor, who held a technical position at Hewlett Packard Laboratories

Headquarters: Pittsburgh

Funding: $5 million from Draper Triangle Ventures and Clearwater Capital Partners

What the company offers: BitArmor Security Suite, software that lets IT protect and manage the life cycle of stored data. The product eliminates the need for public key infrastructure-based key management through a proprietary, automated approach.

Why the company is worth watching: In addition to encrypting data, BitArmor lets administrators create policies for data storage and retention. Policy management is a growing issue with encrypted data.

How the company got its start: Co-founders Patrick McGregor and Matthew White were undergraduate students together at Carnegie Mellon University and continued postgraduate research on what eventually became the BitArmor Security Suite.

Where the company got its name: After discovering that companies already had taken nearly every name of a Roman or Greek god, the founders focused on a name that describes the product's function.

Who uses it: The product began shipping in September. The company has not released customer names yet.