This year has seen four mega-rounds of $100M+ in cybersecurity and all of those deals went to companies that help secure enterprise networks.
The cybersecurity industry is on a tear. In fact, investors backed more private cybersecurity companies in 2016, than any year since at least 2013. Likewise, deals in Q1’17 hit an all-time quarterly high, up 20% from the previous quarterly deal high.
One hot area of cybersecurity involves securing enterprise networks. In fact, there have been four mega-rounds of $100M+ in cybersecurity this year, including Tanium, Crowdstrike, Netskope, and today Illumio, which secured the largest round in the industry this year with its $125M Series D. All four of these companies help secure enterprise networks.
One notable trend shaping today’s enterprise networks is that businesses and governments are increasingly moving their operations to the cloud. This includes offering cloud-based business applications, and accepting the growing trend of employees using multiple mobile devices outside of the company perimeter to access the network and do their jobs. More cloud based products and services combined with the billowing number of network connected devices create vulnerabilities as unregulated network access points leading to a unique cybersecurity challenge.
Startups that are tackling the enterprise cloud security challenge include companies known as CASBs or Cloud Access Security Brokers. CASBs serve as the platform for security managers in large companies to monitor for risk across their SaaS portfolios, including CRM, file sharing, HR, and access to enterprise apps, and more. The private CASBs compete with offerings from Cisco, Microsoft, and other tech giants including incumbent cybersecurity firms such as Symantec, among others.
Governments are also getting on board with the CASB trend, and CASBs are now competing aggressively for the government market. An interesting partnership, detected using CB Insights news aggregation tool, is CASB company Skyhigh Networks’ recent deal with the nonprofit Center for Internet Security, which provides cybersecurity advice to local and state governments in the US.
CASBs are gathering momentum as this space heats up. Yesterday, the CASB Netskope, secured $100M in a Series E round from investors that included Accel Partners and Social Capital, among others. CrowdStrike, which provides SaaS based enterprise endpoint protection, also secured $100M in a Series D round that valued the company at $1B in May this year. Accel Partners also participated in the mega-round round to CrowdStrike.
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Comparing Leading CASBs
Below is a comparison of a few of the top private players in the CASB space, including Skyhigh, Bitglass, Netskope, and CipherCloud. Notably, each CASB in the table below is backed by one or more smart money VC including NEA, Sequoia, Greylock, a16z, Lightspeed, and Accel. With Netskope’s recent mega-round from Accel, mentioned above, it is now one of the most well-funded private CASBs.
Interestingly, there have been a flurry of smaller CASB-related exits in recent years, so look for these still-private companies below to be high on the acquisition list of corporates in cloud and enterprise services. Firelayers was acquired by Proofpoint last year while Palerra was acquired by Oracle (both acqs were in the $50M range). Elastica and PerspecSys were acquired by Blue Coat Systems (now owned by Symantec) in 2015. Elastica was a larger exit at $280M.
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