Cybersecurity companies that offer Identity and Access Management (IAM) solutions have raised $362M across 34 deals year-to-date (10/18/2016). Those numbers are well off the peak in dollars and deals that these companies witnessed in 2014.
The trend in IAM funding parallels the funding contractions we’ve been seeing across the cybersecurity industry as a whole this year, amid investor worries that the cybersecurity space has been overfunded.
Four out of the seven private company unicorns in cybersecurity reached their $1B+ valuations last year, as the category remained hot in the wake of persistent security attacks and hacks faced by business and government. Unicorns in the IAM space include Okta, valued at $1.2B, which is focused on identity and access management as a cloud-based service. The company has raised $229M in funding and is the most well-funded IAM cybersecurity startup. Okta also has the second-highest score among cybersecurity startups on Mosaic, CB Insights’ quantitative framework, which uses public data and predictive algorithms to measure the overall health and growth potential of private companies.
Five out of the top 10 Mosaic Scores in cybersecurity are for pure-play IAM companies: Auth0 (940) which has the highest Mosaic Score in all of cybersecurity, Okta (920), Sift Science (910), Dashlane (910), and ThreatMetrix (910).
We used CB Insights data to look at funding trends in the IAM space, as well as the share of deals to these startups by stage, and identified the most well-funded IAM companies.
We define the IAM space as cybersecurity companies that have a core product that determines a user’s identity by authenticating their credentials and authorizing them for appropriate access to digital resources. Some of the companies in the IAM category also offer products for other areas of cybersecurity.
Annual funding trends
Dollar funding to IAM startups has dropped off this year compared to the levels we saw in 2014 and 2015, while deals are on track to end 2016 relatively flat compared to 2015, but down off the high of 56 deals in 2014. There have been zero $100M+ mega-rounds to IAM companies in the last three years. Additionally, the number of companies obtaining $20M+ rounds in the space are down 60% in 2016 YTD, compared to 2014.
The largest deal this year to a cybersecurity company offering IAM solutions was a $96M private equity deal that went to the company Skybox Security in February. The next-largest deal this year was to the company LogRhythm ($51M Series E+) in August. Neither company is a pure-play IAM company, but both have a core product or service that competes in the category.
The largest deal to a pure-play IAM company this year went to ID Experts ($28M Series B) in August. The next-largest rounds this year to pure-play IAM companies went to: Dashlane ($23M Series C), Auth0 ($15M Series B), and SecureAuth ($10M Other).
Investors seem to be showing less interest in single-point solutions, and instead favoring more comprehensive cybersecurity platforms that reduces businesses’ need to manage many disparate cybersecurity vendors. However, there are some exceptions to the trend.
Last September, the pure-play IAM company Okta secured a $75M Series E round. Okta also obtained a $75M Series F round in June 2014. These were the largest financings to a pure-play IAM company in the last two years.
Share of deals by stage
In the IAM category, much like the trend in cybersecurity as a whole, early-stage (seed/angel and Series A) investments are in decline. Investors are betting less on young cybersecurity companies and shifting their focus to later-stage investment opportunities. The share of seed/angel rounds to IAM companies declined more than 15 percentage points since 2012, and is at an all-time low in 2016 year-to-date. Likewise, the share of Series A investments in the IAM space is at its lowest point in the last five years, while correspondingly Series B and Series C investments in IAM companies are at an all-time high.
The most well-funded pure-play IAM companies
To analyze the most well-funded companies, we looked only at pure-play IAM companies. The top most well-funded company is the unicorn Okta. Rounding out the top three are Netskope and Centrify.
| Rank | Company | Total Disclosed Funding $M |
|---|---|---|
| 1 | Okta | $229M |
| 2 | Netskope | $121M |
| 3 | Centrify | $94M |
| 4 | ThreatMetrix | $92M |
| 5 | TeleSign | $78M |
| 6 | Sonavation | $54M |
| 7 | Nok Nok Labs | $52M |
| 8 | Dashlane | $50M |
| 9 | Payfone | $48M |
| 10 | Symplified | $47M |
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