Netskope Closes $75M Funding Round As Unchecked Cloud Software Lurks In The Workplace

As cloud-based apps, both sanctioned and not, proliferate the workplace, the market for tools that protect sensitive business data from their unregulated clutches is heating up and so are investments in the cloud access security brokers that develop them.

Netskope, which offers a SaaS platform that identifies so-called Shadow IT, analyzes the threats and implements cloud security policies, Thursday said it closed a $75 million Series D funding round, bringing the total investment in the four-year-old startup to $130 million.

While the Los Altos, Calif.-based software developer wasn't exactly looking for more funding, an opportunity came along with Iconiq Capital, an investor that fit the company's culture, Netskope CEO Sanjay Beri told CRN.

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"We have a singular focus, and that's to dominate security on cloud apps. This is one part of that, getting the capital to continue to scale," Beri told CRN. "We will be the dominant vendor securing cloud apps."

Netskope wants to be the unquestioned leader of the cloud access market with its platform that helps organizations discover all the cloud-based software running within their firewalls and set policies to mitigate its potential threats.

Iconiq led the round that also included existing investors Accel Partners, Lightspeed Venture Partners and the Social + Capital Partnership.

The $75 million will be spent on research and development, to grow sales and marketing teams, and to further develop Netskope's burgeoning channel, Beri said.

"For us, it really is about continuing to scale each function," Beri told CRN. "That was the focus since the day we built the company until now. We have some of the largest customers across each vertical."

Beri places the total SaaS market at $100 billion, with about 5 percent of the spend going toward security. That implies a $5 billion opportunity in an IT landscape that's rapidly evolving.

"Two years ago the conversation was 'How many apps do I have?' That was sort of phase zero," Beri said.

"What it's matured to now is, 'Great, thanks for telling me, can you do something about it? Can you protect my sensitive data going to those apps? Don't just give me a read-only report on what apps I'm doing. Give me policy.' "

That demand has won Netskope large enterprise customers across the retail, health-care, insurance and banking sectors.

Some of those customers must address Shadow IT usage across hundreds of thousands of individual employees. To simplify the process, Netskope's platform was developed so administrators could implement simple, rule-based policies in a manner that reflects how they think, such as prohibiting certain types of data from residing on cloud storage.

"One of our goals is to remove the complexity, make it simple to govern the cloud," Beri said.

Netskope introduced a channel early last year and now drives the large majority of its business through its partners.

"For us, our focus on the channel is bringing in specialized channel partners who can bring value-add. Deep expertise in security, networking, a great relationship and the ability over time to build services around products," Beri told CRN. "Our focus is on providing them education, training, support and making sure they have a great, healthy business model."

Jason Clark, chief security and strategy officer at Optiv, the security specialist formed from the merger of Accuvant and FishNet, told CRN that cloud security has jumped into the top five concerns of the chief information security officers the company works with.

" The best way to address this and other security issues is to ensure the right people, processes and products are in place," Clark said via email.

Optiv, a Netskope partner based in Denver, is happy to see investors pouring money into security platforms like Netskope that organizations can leverage as part of their overall cloud strategy, he said.