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Shadow Networks, formerly called ZanttZ Inc, has secured more than $10 million in a recent funding round, TechCrunch reported citing the company's filing to the US Securities and Exchange Commission.

According to a source familiar with the round, investors for the Silicon Valley-based security firm include Paladin Capital Group, Yaletown Venture Partners and two other unnamed venture capital firms. Paladin Capital Group looks for investment opportunities in the security and defense segments while Yaletown Venture Partners provides seed investments for startups in the Pacific Northwest and Canada, the report said.

In addition, Shadow Networks was also able to get Cisco Systems Chief Security Officer John Stewart to become part of its Board of Directors as a result of the financing and also because of its extensive contacts in the industry, the report said.

Shadow Networks, whose technology is based on that developed for the US Government that forms virtual environments where cyber attacks can be replicated by programmers, calls its approach "Advanced Threat Deception." Their website explained how they deal with today's new breed of threats called Advanced Persistent Threats or APTs. "Today's Advanced Persistent Threats (APTs) are specifically designed to evade traditional perimeter and endpoint defenses, to live inside networks often for months, undetected. Shadow Networks work to deceive and disrupt attacks under the assumption that they are already operating INSIDE the customer network, helping to protect an organization's critical resources that are the ultimate target of the APT," the site said.

Thus, Shadow Networks addresses not just the basement-dwelling amateur hacker but the hacking groups that have the blessing of a government that are usually behind these APTs. Eric Winsborrow, the company's Co-Founder Chief Executive Officer, likened their technology to putting security breaches in virtual networks that are similar to the Matrix. He told TechCrunch in an interview, "[And] like agents in the Matrix, these honeynets can show up anywhere in the network at any time."