The deal, which brings total investment in the six-year-old company to more than $86 million, comes on top of two previous investment rounds from backers including Benchmark Capital, Bridgescale Partners and Mohr, Davidow Ventures of Menlo Park, Calif.; Inventures Group and Meritech Capital Partners of Palo Alto, Calif.; and Jafco Ventures of San Jose, Calif.

Proofpoint had expected that earlier funding be the company's final private rounds. The new investment is aimed at helping it compete with deep-pocketed e-mail security rivals. Google Inc. of Mountain View, Calif., acquired startup competitor Postini Inc. of San Carlos, Calif., last July for $625 million, following up a January 2007 acquisition of IronPort Systems Inc. of San Bruno, Calif., by Cisco Systems Corp. of San Jose.

Proofpoint chief financial officer Paul Auvil would not disclose a valuation for the new investment, but he said it came at a healthy increase to the company's $20 million third round in March 2006 and will enable it to boost sales and marketing to take advantage of consolidation in e-mail security.

"We have been essentially running at cash-flow-positive for a while now, but we see the competition waning, and there is an opportunity to make a bigger investment in sales and marketing," Auvil said. "We could continue to grow without raising any more money, but there has been a fundamental change in the industry, and our competitors' acquisitions have created more opportunity for us."

Since the acquisitions of Postini and IronPort, those companies have continued to grow, but there has also been speculation that the deals were done largely for strategic reasons -- to incorporate anti-spam and data leakage features into the parent's products. Auvil said Proofpoint positions itself in the market as a pure-play independent player with no potential conflicts in networking or search issues.

Proofpoint does not disclose revenues, but the company reported that its fourth-quarter sales in 2007 reached record levels for the 18th quarter in a row and that sales for the year rose more than 50% over the previous year.

Auvil said that the company's emphasis on channel distribution with security and systems integration partners has driven strong customer acquisition and that a new on-demand product launched last August now accounts for 20% of new customers.

Proofpoint initially offered software-only products focusing on screening inbound e-mail for spam and viruses. But it has evolved to offer an array of features monitoring inbound and outbound mail for inappropriate content that could lead to security, as well as human resources, regulatory and other issues.

The technology automatically screens for risky data transfers, such as social security numbers, financial information and inappropriate content, but also allows corporate users to include customer-specific material.

Auvil said the product has a straightforward return on investment on the inbound e-mail side in terms of improving worker productivity and reducing potential human resources risk from improper material, but that outbound data leakage has been an increasing driver of sales. The company sells into a broad range of horizontal markets, while focusing on retail, financial services and healthcare customers.

Three years ago Proofpoint launched a specialized hardware appliance to allow customers to deploy its system quickly in a plug-and-play format, and in 2006 the company launched a virtual appliance product that offers the same features running on customers' existing servers.

DAG partner Greg Williams said in a statement that the firm was attracted to the deal based on the strength of the sector and on Proofpoint's record of consistent growth.

Proofpoint used no outside financial adviser for the round. It had legal work on the deal from Matt Quilter of Fenwick & West LLP in Mountain View. Craig Venable of Cooley Godward Kronish LLP in San Francisco represented investors. - Clifford Carlsen