E-mail security firm Proofpoint on Wednesday said it took $28 million in a funding round led by new investor DAG Ventures.

The new cash infusion raises the six-year-old firm's overall investment tally to $86 million and despite the fact that few security firms have gone public in recent years, Proofpoint executives see an IPO as a viable future option.

"We were thrilled to be able to raise $28 million at the valuation that we did because it gives us all sorts of flexibility including possibly going public," said Paul Auvil, CFO of Sunnyvale, California-based Proofpoint.

But the firm is keeping its options open.

Last year two Proofpoint rivals, IronPort and Postini, were acquired for hefty sums. Cisco acquired IronPort in January 2007 for $830 million, and Google acquired Postini in July 2007 for $625 million. Prior to the acquisition Postini was rumored to be headed to an IPO.

"Both were good valuations that judged in hindsight were good choices," Mr. Auvil said. "But there are other large firms who have not yet made investments in this space and feel the need to add security to their portfolios."

Proofpoint provides products and services that allow companies and government agencies etc. to screen incoming mail for things like viruses and spam and outgoing mail for potential compliance violations.

The firm uses a learning engine that can be programmed by the user using keywords and phrases to do things like screen for unpublished earnings data going to addresses outside the firm via email.

"Being able to screen for specific things inside email is of particular interest in a number of areas including intelligence collection and law enforcement, so I can see why this firm got the valuation it did," said Geoffrey Turner, an analyst with Forrester Research.

But based on recent history, Mr. Turner does not see an IPO as a likely event in Proofpoint's future.

"Security in of itself is not commercially viable, and that has been proven by VeriSign and RSA Data Security as you see they are broadening out beyond security or shedding security units," he said.

The value of security is enhanced when it is part of a larger and diverse mix of different products and services, Mr. Turner said, but it is not a desirable business model as a large standalone business.

Proofpoint plans to use its new funds for customer acquisition and product development.

Benchmark Capital, Bridgescale Partners, Inventures Group, JAFCO Ventures, Meritech Capital Partners, Mohr, Davidow Ventures and RRE Ventures also participated in the round.