In Europe, 23 million SMBs represent 99% of all businesses on the continent. While SMBs have small budgets, they expect product completeness; as such, a platform solution has historically been required to serve these businesses. Enterprises, on the other hand, are happy to purchase best-of-breed solutions that address specific problems effectively, or platform solutions that solve multiple problems at once.

Companies operating in the network infrastructure sector have historically encountered this paradigm as well. Network infrastructure powers the internet as we know it (with a total addressable market of over $30B). Every application uses rented space on a physical server to store its files and data. Managing the traffic that hits these servers is critical.

Companies innovating in the space have had to focus on serving either enterprises with best-of-breed solutions or platforms. The midmarket and enterprise segments are already dominated by a few incumbent platforms like Cloudflare ($40B market cap) and Akamai ($12B market cap), and some specialist solutions like Imperva ($4B acquisition), have also been successful. However, the SMB segment hasn’t seen a clear market leader as winning in this space requires a differentiated go-to-market strategy and continuous product evolution given the traditional difficulty in reaching SMBs.

The network infrastructure market is undergoing a critical transformation, driven by the rise of bot traffic and the increasing complexity of threats. Around 50% of all global web traffic stems from bots, 66% of which is malicious, which means that businesses are under growing pressure to manage both malicious and legitimate bot traffic - with AI now making it easier for threats to bypass traditional defenses. Enterprises might be able to protect themselves, but SMBs are left vulnerable and experience the majority of cyber attacks.

For startups, there is a clear opening. SMBs are hungry for superior solutions that are easy to use, effective but also AI-resilient. Incumbents often rely on outdated, rules-based systems, while newer entrants are innovating with reverse proxy architectures and AI-enhanced behavioural detection. SMB customers are looking for lower false positives and higher ROI on their security tools.

At Dawn, we are proud to have backed Blackwall’s €45m Series B. Blackwall is unique in that its founders were as innovative in their go-to-market approach as they were in building their product. In order to reach millions of SMBs, Blackwall is building products for channel partners — Hosting Service Providers (HSPs) and Managed Services Providers (MSPs) — to sell through to SMBs. So, rather than being seen as a necessary evil, Blackwall’s success is inextricably linked to the success of its channel partners. The products that Blackwall is building directly help channel partners with their operations.

Blackwall’s flagship offering is a network security product that proxies requests from the outer web to customers’ servers, hiding servers from bots, hacker attacks, and other kinds of unwanted visitors, while simultaneously optimizing traffic flow. At a time when customers are looking for a best-of-breed solution, Blackwall’s AI-powered product shines, driving 30% improvement in malicious activity detection, and reducing the cost of aftercare by 15–20%.

We continue to be excited by network infrastructure, especially in a world where the number of applications being built is exploding thanks to Large Language Models (LLMs). If you’re building in this space, get in touch with Norman (norman@dawncapital.com) or Shamillah (shamillah@dawncapital.com).

For more on why we invested in Blackwall, read our blog here.