Another unicorn and a massive funding round for the cybersecurity industry. Kiteworks, a company that builds tools to protect email communications, file sharing, and other situations where you work with sensitive or proprietary data outside the firewall, has raised $456 million from Insight Partners and Sixth Street Growth. The investment values the company at more than $1 billion.
This is a notable development for San Mateo-based Kiteworks, formerly known as Accellion, which was the target of a massive data breach in 2021. The incident, involving legacy services, affected at least 300 organizations, including Morgan Stanley, the University of California, Kroger, and Shell.
Fast forward to today, and Kiteworks (also the company’s flagship product) is going strong. It’s profitable and has been for the past two years. And its tools serve 100 million end users and over 3,650 global enterprises and government agencies.
This funding injection comes at a time when users and organizations continue to struggle with IT breaches, but the overall funding environment for startups remains challenging.
This has led to a number of cybersecurity companies that are doing well as integrators: Wiz raised $1 billion earlier this year to acquire smaller companies, and Kiteworks is another.
Kiteworks said it would use some of the funds for acquisitions.
“We have a very aggressive M&A strategy that we started about a year and a half to two years ago,” Chief Strategy Officer Tim Freestone said in an interview. “This will help us continue that strategy over the next four years.” Since 2022, Kiteworks has acquired four small business startups. He added that the money will be used for hiring, R&D and business development.
The cybersecurity industry has been characterized by a rapid and prolific surge of startups, partly because the threats to be addressed are constantly evolving and partly because enterprising technologists are eager to pursue those opportunities. Arguably, Kiteworks represents the other side of the cybersecurity story.
The company is not a “startup” in the traditional sense, as it has been privately held for over 20 years.
While much of the attention in recent years has been on cloud, network/infrastructure, and application security, Kiteworks is focused on data, specifically how to protect sensitive data that lives in disparate places, such as on-premises, in the cloud, or entered into forms on the web.
“We finally got to the data layer as an industry, and that helped us,” Priston said.
One of Kiteworks’ unique selling points is its specific approach to handling sensitive data as part of a Personal Content Network or PCN (not to be confused with the Process Control Network, another PCN in information security). For those who wish to become a government agency or supplier to such an agency, there is a strong layer of data protection compliance that must be passed in order to work with them.
Kiteworks claims to be currently the “only FedRAMP-approved secure platform” in the United States, providing support for activities such as file sharing, file transfer, and email communications to meet compliance requirements. Some solutions are creative: DRM tools that make documents appear to recipients to be “real” documents so they can be worked on, but are actually faxes, while ensuring that most data never leaves the sender’s firewall.
“This investment strengthens Kiteworks’ role in solving the challenge of managing sensitive data,” said Jonathan Yaron (pictured below), Kiteworks’ CEO and Chairman. “We want to accelerate our growth and continue to innovate to meet our customers’ evolving needs.”
Insight Partners and Sixth Street Growth’s joint investment is a mix of primary and secondary equity in the company. The company doesn’t disclose the percentage of primary and secondary, but according to PitchBook data from early July, the first tranche of the total designated as growth capital was $228 million.
With over $4.5 billion invested in cybersecurity (including support from Wiz), Insight believes now is the time for Kiteworks to double down on its investment.
“With the rise in third-party cybersecurity threats and stringent regulatory requirements, Kiteworks has a large market opportunity, both organic and inorganic growth,” Eoin Duane, Insight’s MD, told TechCrunch in an email. “Customers love Kiteworks PCN. There is strong growth within the existing customer base, and the company is well positioned to attract new customers as data security becomes increasingly important.”
