Netskope Lands $100M In Series E Funding, Plans More Channel Investment
Netskope has landed $100 million in Series E funding, which the cloud access security brokerage (CASB) company said it would put towards product development and further investments in its channel ecosystem.
The funding, announced Tuesday, was led by Lightspeed Venture Partners and Accel, with participation by Social Capital, Iconiq Capital, Sapphire Ventures, and Geodesic Capital.
The funding announcement builds on a year of strong growth for Los Altos, Calif.-based Netskope, one of the few remanding standalone (CASB) companies in the market. CEO Sanjay Beri said in an interview with CRN that the latest round of funding validates the need for technologies like Netskope to address the security concerns cloud brings as it disrupts the modern workplace, as well as the approach the company has taken in the cloud security market so far.
"For us, everything we have done since the beginning has been to build an iconic, standalone security company," Beri said. Beri said that is key for channel partners, who want to ensure the company they partner with has the capital and balance sheet to be viable for the long term. The funding for Netskope comes on the heels of a year of strong growth, with more than 300 percent growth in top-line revenue and number of customers, Beri said.
Dan Thormodsgaard, CTO and co-founder of Kansas City, Mo.-based Fishtech Group, said Netskope addresses many of the security concerns faced by customers as they move to the cloud, an area that Fishtech specializes in. He said the new funding would allow the company to innovate to stay ahead of the curve, as well as move into new markets.
"This industry is moving at a very face pace, and this part of our industry is the fastest moving, and it's evolving at a rapid pace," Thormodsgaard said. "That requires resources, and this lends them the ability to expand their capabilities at a much faster pace."
Beri said Netskope would put the funding towards product development, furthering its go to market strategy, and investing customer support, services and deployment. On the product front, Beri said Netskope is expanding its cloud security platform to include offerings for web security, a new market for the company. Beri said the company would start talking about that expansion more near the end of the year.
Beri said the investments in go to market would largely center on the channel, which accounts for 90 percent of Netskope's sales. He said he sees partners as key to the company's growth goals. He said Netskope plans to invest significantly in channel enablement, which will include training, partner support, and helping partners transition their own businesses and customers to a cloud-based, recurring revenue model.
"I have personally always held the notion that partners and the channel are the only way to get [to being a large security vendor]. If you look at scale, and when you look at the cloud and the services people need, the channel in all forms – whether its traditional VARs, systems integrators or beyond – they will play a larger and larger part of it," Beri said.
One thing that partners won't see is a Netskope acquisition, Beri said. The CASB market has seen significant consolidation in the past few years, including the acquisitions of CloudLock by Cisco, Elastica by Blue Coat Systems (and then Blue Coat Systems by Symantec), Adallom by Microsoft, Palerra by Oracle, and Imperva Skyfence by Forcepoint.
"We have been unique since the beginning where we said we were building a standalone, iconic security company. We have never wanted to and never will want to be acquired … It's just not going to happen here," Beri said.
As a partner, Fishtech's Thormodsgaard said it is good to see a vendor committing to being a standalone company, as an acquisition can cause a loss of focus on core solutions. He said maintaining that focus on cloud security, which is in high demand from customers, as well as a focus on partners, who can help educate customers on the CASB solution, will help Netskope be a leader in the space.
When asked about potential IPO plans, Beri said Netskope is "focused on building our leading cloud security platform," including its next expansion into the web security market.
That future is key, Beri said, as he sees the market for CASB solutions maturing. He said customers used to turn to CASBs for visibility into cloud app usage, but are now seeing the potential to leverage CASB platforms for fully governing and securing cloud environments.