Menlo Security Raises $100M To Widen Portfolio

‘Despite the challenges of COVID, we’re having a great year. We have a solution that’s of high relevance in the COVID era,’ says Amir Ben-Efraim, CEO of the isolation platform provider, after closing a Series E funding round.

Menlo Security completed its Series E round and notched a valuation of $800 million to scale go-to-market, double down on engineering and accelerate product delivery.

The Mountain View, Calif.-based Secure Web Gateway provider said the $100 million round was led by Vista Equity Partners and will help Menlo Security fuel market and category expansion. The cloud-based isolation platform provider has in 2020 doubled its average deal size and achieved annual recurring revenue growth of 155 percent compared with the same period last year.

“Despite the challenges of COVID, we’re having a great year,” Menlo Security CEO Amir Ben-Efraim told CRN. “We have a solution that’s of high relevance in the COVID era.”

[Related: CRN Exclusive: Menlo Security Launches Partner Program, Looks To Go 100 Percent Channel]

Menlo Security started with its web isolation core and subsequently developed a cloud-based Secure Web Gateway to replace legacy, on-premises gateways, Ben-Efraim said. More recently, Menlo Security has bolted a series of capabilities onto its cloud gateway including data leak prevention, anti-virus defense, sandboxing, private access, firewall as a service and cloud access security broker (CASB), he said.

Ben-Efraim wants to use the Series E proceeds to enhance and deepen these newer offerings, providing partners and customers with a greater level of policy granularity, capabilities and control. Getting all of these functions to work well together has been a significant undertaking, and he said offering robust capabilities through the cloud gateway will allow customers to dispose of competing on-premises tools.

“There’s an infinite feature list in each of those areas,” Ben-Efraim said.

From a go-to-market perspective, Ben-Efraim said Menlo Security is looking to ride its five-year, $198.9 million channel-led contract with the Defense Information Systems Agency (DISA) to at least double—and maybe even triple—the size of its U.S. federal team between 2020 and 2021. The big contract with DISA will create a lot of growth in the U.S. federal space given how much security spending occurs there.

Menlo Security is also looking to double down on winning markets internationally like Japan, Singapore and London where demand is robust across the financial services, critical infrastructure, health-care and government sectors, Ben-Efraim said. The company does roughly half its business in the U.S. today, and Ben-Efraim expects growth in the U.S. to outpace international growth given the big contract.

As far as the channel is concerned, Ben-Efraim said Menlo Security hopes to use the money to do more training and enablement with partners as well as invest more heavily in co-sponsored events with partners. The company sells exclusively through the channel, and Ben-Efraim said Menlo Security wants to add more personnel who are focused purely on enabling solution providers to sell and grow.

Menlo Security was founded in 2013, employs 235 people, and has now raised $260.5 million in seven rounds of outside funding, according to LinkedIn and Crunchbase. The latest funding comes just 16 months after the company closed a $75 million Series D round led by J.P. Morgan Asset Management.

The company is looking to boost revenue and increase operational rigor in areas of the organization like legal and finance so that it is positioned to go public in a couple of years, Ben-Efraim told CRN.

“Every aspect of the business needs to grow and develop,” Ben-Efraim said. “And we’re deeply committed to seeing that vision through.”

Trace3 has relied on Menlo Security’s isolation technology for at least three years to make it safe for customers to use personal email and cloud storage tools like Box in their corporate environments, according to Bryan Kissinger, vice president and CISO at the Irvine, Calif.-based company, No. 39 on the 2020 CRN Solution Provider 500.

Kissinger hopes Menlo Security uses the Series E money to broaden its capabilities into other areas of web and cloud protection so that the company can prevent data leakage and have management control over data in different environments. Broadening its toolset to address secure access should help Menlo Security fend off larger competitors that are constantly adding new capabilities via acquisition, Kissinger said.

From a partnership perspective, Kissinger said he would encourage Menlo Security to provide its top channel partners with a dedicated channel manager as well as a funded engineering position in the solution provider organization focused exclusively on that vendor. These types of investments tend to drive a lot of new business and create a tighter bond between a vendor and its top solution providers, Kissinger said.

“I’ve always enjoyed working with the Menlo folks, both as a customer and as a partner,” Kissinger told CRN. “I consider them to be the leader in the Isolation space.”