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WatchGuard Plans Major Investments After Vector Capital Takes Majority Stake

‘I am absolutely thrilled. I think it’s the right move at the right time,’ says Don Gulling, CEO of Verteks Consulting, a Florida-based MSP partner.

Vector Capital is taking a majority stake in cybersecurity vendor WatchGuard Technologies, buying out another investor and vowing to plow more funds into product development and sales of WatchGuard‘s security offerings.

The San Francisco-based private equity firm is currently a joint investor in WatchGuard along with Francisco Partners and Investing PROFit Wisely (IPW). But WatchGuard announced on Wednesday that it has entered a definitive agreement with Vector Capital to make a “large new equity investment” in the cybersecurity firm, acquire the equity interests of Francisco Partners and become majority owner in the process.

Terms of the deal, which is expected to close by the end of the third quarter this year, were not disclosed.

[RELATED STORY: WatchGuard Debuts Consumption, Subscription Models For Endpoint Security]

Though officials didn’t reveal WatchGuard’s revenues nor how much extra funds Vector is sinking into WatchGuard, the Seattle-based firm said in a statement that Vector’s financial heft will help “further accelerate the company’s growth” and allow continued investment in “critical areas including but not limited to Cloud transformation, secure access service edge (SASE), extended detection and response (XDR), managed detection and response (MDR), and further innovation in security automation.”

And, in an email interview with CRN, Prakash Panjwani, CEO at WatchGuard, made clear his firm’s commitment to the channel will only increase under Vector’s majority ownership.

“As a 100 percent channel company (in sales), we have very focused resources on supporting the channel, all the way from recruiting, on-boarding, ongoing training and enablement, to end-user lead generation and ongoing customer support,” said Panjwani (pictured). “That single-minded focus on channel is what has enabled us to grow rapidly. We will continue to add resources to support the channel and our rapid growth, which will occur as a result of this transaction.”

Panjwani added: “This new investment means even more platform innovation and continued investment in our partner support and enablement mechanisms, while continuing to expand our portfolio of services. All of which leads to a better experience and more revenue opportunities for our partners.”

Besides in-house investments in security products, Panjwani said acquisitions will be part of WatchGuard’s strategy to expand its “scale and Unified Security Platform capabilities.”

Executives at two of WatchGuard’s MSP partners were excited about Vector Capital’s increased role in WatchGuard, saying the private equity firm sounds like it’s committed long-term to improving and growing WatchGuard.

“I am absolutely thrilled,” said Don Gulling, CEO of Verteks Consulting, a Florida-based MSP and WatchGuard partner. “I think it’s the right move at the right time.”

WatchGuard has excellent security products and channel programs. But it needed extra capital to develop and acquire innovative security products to add to its offerings, Gulling said.

He said he “hopes and expects” that Vector’s investment will lead to a broader and more integrated security platform.

Calvin Engen, CTO of F12.net, an MSP based in Canada, said he’s also excited by Vector Capital’s greater role in WatchGuard and plans to increase WatchGuard’s product offerings on one platform.

“One of the many challenges in our industry is that it’s very fractured,” said Engen, noting the wide variety of vendors and security products now being pitched in general to channel players. “This has led to gaps in security coverage and MSPs have been frustrated.”

But now WatchGuard, with the backing of Vector Capital, has a chance to “step up with more holistic security products” that will make the cybersecurity industry less complex for MSPs and customers alike.

“MSPs represent the future of security delivery, but to be successful, they need a bespoke platform built for their needs,” said Sandy Gill, managing director of Vector Capital, in a statement.

“WatchGuard is uniquely positioned to lead the market in enabling those MSPs with its Unified Security Platform. We are excited to further invest both organically and via acquisitions in the company’s mission to deliver security-focused MSPs one vendor, one platform, and one vision to build their business upon.”

Alex Slusky, founder, managing director and chief investment officer of Vector Capital, said in a statement that the firm is “proud of the foundation of success we’ve built with WatchGuard’s management team and look forward to fueling the next phase of growth and transformation for the company.”

WatchGuard’s Panjwani said the Vector deal is a “great milestone” for his company. “It is recognition of what we have already accomplished by focusing on becoming the security platform for MSPs.”

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