"Founded in 1998, iDefense had previously raised $22 million from U.K.-based E-Capital Investments, Internet services firm USWeb/CKS, Japan-based Itochu Corp. and other funds before filing for voluntary Chapter 11 bankruptcy protection in the summer of 2001. E-Capital came back for another beating, throwing an additional $600,000 into the company to get it going again, but that effort failed and the company ran out of cash again in April 2002.

"That's when my fund came in and took over the company," said Watters, who is Dorset Capital's only partner. "There was a passion and support of customers that existed among key employees. The reason I came in was because everything was broken. The whole brand had to be changed." Putting in an initial $2 million over the course of 2002, Watters stepped in as CEO and chairman in January 2003. Dorset Capital added another $4.5 million over 2003 and put in the last $500,000 in March 2004."