2020 Cybersecurity Funding
The following is an excerpt from Security Yearbook 2021. ( Pre-order here for the limited first print run of 2,000.) It originally appeared in Forbes but has been taken down.
The lifeblood of the cybersecurity industry is new investments, both in startups and established companies. 272 vendors received additional funding in 2020 based on data published by Crunchbase. The total new investment for 2020 was $10.7 billion.
[Chart: Funding Rounds in 2020 (get the book ;-)]
The Biggest Funding Rounds in 2020
Publicly traded MicroStrategy, which has a mobile security platform but is primarily a data discovery and analytics company, raised $650 million in debt in December.
Palantir Technologies became public via a direct listing on the New York Stock Exchange at the end of September. Its products for link analysis of large data sets is primarily used by US intelligence agencies. Prior to the direct listing, it raised $550 million in June.
Identity provider OneTrust raised $510 million in 2020. $210 million was invested in February and led by Insight Partners, and $300 million led by TCV in December. While they have talked about preparing for an IPO in 12-18 months, OneTrust has been making acquisitions in early 2021.
Publicly traded Unisys raised $485 million of debt in October. Unisys is primarily a technology services company, but also offers managed security services as well as technology products like Stealth, a micro-segmentation solution.
In November, a month before the SolarWinds attack that hit FireEye, Blackstone invested $400 million in FireEye. ClearSky also participated in the deal, which was a PIPE (Private Investment in Public Equity). The investors bought 400,000 preferred convertible shares that pay a 4.5% dividend and are convertible at $17.25, meaning they could convert to 23 million regular shares valued at $17.25 each. FireEye’s headcount dropped 2% in 2020 to 3,039.
Cato Networks raised an additional $297 million in 2020 while its headcount grew 124% to 264 people. Cato is a secure access service edge (SASE) provider. Its “edge” consists of dozens of points of presence around the world. Unlike its competitors, Cato also deploys its own SDWAN hardware appliances to its customers.
SentinelOne took in two large rounds in 2020. First, in June, Insight Partners led a $120 million round, followed by a $267 million round led by Tiger Capital Management. This brings total investment over seven years of $696 million. There are reports that this endpoint security company is planning an IPO valued at $10 billion.
In February 2020, Netskope took in $320 million from Sequoia Capital. This was excellent timing as the entire SASE and zero trust world saw a meteoric jump in demand as the world shifted to a work-from-home stance.
ReliaQuest is in the fast-growing space of security analytics delivered from the cloud. It took in $300 million from private equity firm KKR and Ten Eleven Ventures in August.
Tanium, the endpoint configuration and patching solution, added to its long list of investment rounds in 2020, first with a June investment from Salesforce Ventures of $117.2 million, followed by a private equity round of $150 million in October. They revealed in January 2021 that the investor was the Ontario Teacher’s Pension Fund. They are using the influx of capital to grow quickly. Tanium had a headcount of 1,553 at the end of 2020, up 63% for the year. At these funding and growth levels it is easy to assume that Tanium will be planning to go public soon.
Snyk raised an additional $200 million from its existing venture backers in September. Snyk builds application security tools to help developers find and fix vulnerabilities in their cloud apps. With a headcount of 414 at the end of 2020, it doubled in size.
Other Notable Funding Rounds
Despite the pandemic and drastic slowing of the economy, many fast-growing vendors took in outsized funding rounds. Here are just some of those worth noting.
Dragos, an industrial control system security company founded by Robert Lee, took in $110 million and grew to a 229 headcount.
Beyond Identity raised a total of $105 million as it launched in 2020. Beyond Identity is in the passwordless space. They inject certificates into secure enclaves on devices that are then used to authenticate users. Jim Clark, former CEO of Sun Microsystems and founder/CEO of Netscape, is the co-founder and chairman. When Beyond Identity announced a free offering it was reminiscent of Netscape’s go-to-market strategy with the first free web browser from a funded company. Don’t forget Netscape’s contribution to the security industry with the first browser to accept Versign’s certificates.
Menlo Security, which is pioneering remote browser isolation, took in $100 million from Vista Equity Partners in November. It grew 60% in headcount to 239 people by the end of 2020.
Orca Security, a Cloud Security Posture Management (CSPM) vendor, raised $75.5 million. It grew 60% in headcount to 239 people by the end of 2020.
Axonius, the modern asset management solution provider, raised $58 million.
Salt Security took in $50 million, indicating investor recognition of the growing market for API security solutions.
Perimeter 81, a startup in the SASE space, raised $50 million to continue to build out its points of presence around the world. They are competitive with Zscaler and Cato Networks.
Axis Security, a young Israeli startup in the zero trust application access space, raised $49 million.
So many fast growing vendors to track. How can anyone keep up? It’s a full time job for me.