eSentire raises $325M, To Hire 400 Workers For Massive Growth
‘We want to not only own this market, we also want to continue to innovate the market. And we now have a great amount of capital and partners to do that,’ eSentire CEO Kerry Bailey tells CRN.
eSentire has raised $325 million and notched a valuation above $1 billion as the company looks to hire 400 employees and expand across Europe and the Asia-Pacific region.
The Waterloo, Ontario-based managed detection and response (MDR) vendor said it has exceeded $100 million in annual recurring revenue and will use Tuesday’s funding to scale operations globally to meet growing enterprise demand. The $325 million investment came from Georgian and CDPQ, though private equity firm Warburg Pincus will remain eSentire’s majority stakeholder.
“We want to not only own this market, we also want to continue to innovate the market,” eSentire CEO Kerry Bailey told CRN. “And we now have a great amount of capital and partners to do that. What we’re here to do and build a long term, sustainable business that changes the cybersecurity industry.”
[Related: eSentire Exec: ‘Not Every Single MDR Is Created Equal’]
For a technology perspective, Bailey said eSentire plans to use the proceeds to widen the signals coming into its detection platform, increase its co-managed capabilities, and tighten its integration with the Microsoft security stack. eSentire wants to organically strengthen its ability to get the right identity signals and respond if there’s bad behavior and add signals through partnerships with SentinelOne.
As for co-management, eSentire wants to add one-click provisioning and self-service capabilities for channel partners and enterprise customers and give partners full visibility into threat investigations. And eSentire wants to strengthen its integration with Microsoft products like Defender and Sentinel and apply a layer of security on top of it given how rapidly customers are adopting Microsoft’s technology.
From a geographic standpoint, eSentire wants to increase its sales outside the United States from between 20 percent and 25 percent today to 38 percent next year and 50 percent two years from now. Bailey said the company has opened offices in London and a Security Operations Center in Ireland and has seen its European business triple from Q1 2021 to Q2 2022.
eSentire set up shop in Latin America two years ago, and more recently opened offices in Australia to drive significant business in the Asia-Pacific region, Bailey said. The company is focused on building out a channel ecosystem in international markets, and eSentire’s sales motion abroad is typically channel led.
“I can’t underestimate the strength of where the MDR market is right now,” Bailey said. “This is the only answer to cybersecurity. Selling more products isn’t going to work, and the rest of the world is seeing that right now.”
eSentire wants to get half of its bookings from channel partners in the fiscal year ended Jan. 31, 2023, and three-quarters of its bookings from channel partners by Jan. 31, 2024. Less than 15 percent of eSentire’s sales were going through the channel when Bailey started as CEO in February 2018.
The average transaction value (ATV) of sales going through the channel at eSentire was historically between $50,000 and $75,000 but is accelerating toward $250,000 to $300,000 as solution providers go after customers with enterprise security needs, Bailey said. eSentire has established relationships with master agents to push upmarket with the channel and is now seeing partners close seven-figure deals.
In the second half of 2021, Bailey said eSentire began rolling out richer incentive programs, enablement enhancements, and a more robust certification programs for channel partners. With the $325 million investment, eSentire plans to triple its investment in go-to-market and marketing, make lead generation easier for partners, and hire more business development reps (BDRs) to drive business via the channel.
eSentire said it plans to hire more than 400 team members globally across all facets of its business over the next 18 months, bringing the company’s headcount to more than 1,000. The company also intends to continue investing significantly in research and development to support expansion of its Atlas XDR (Extended Detection and Response) software as a service offering.
From a metrics standpoint, Bailey said eSentire is most focused on increasing net retention from 108 percent to 120 percent, reducing the average deal cycle from 55 days to less than 50 days, and boosting the speed of provisioning from seven or eight days today to less than 48 hours going forward. eSentire’s net retention should benefit from making it easier for partners to get upsell and cross-sell opportunities.
“This is a software-driven business. It needs to be easy to use, and time is risk in our business,” Bailey said. “The more time a customer is uncovered, the less time we’ll be able to see what‘s happening in their environment. It’s better for the customer, it‘s better for the partner, and the overall efficacy of what we do is greater, so time matters to us.”