1Password, a Toronto-based password manager, announced today it has raised $200 million in a massive Series A funding round that was led by Accel.

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This round is notable for a number of reasons. Namely, it’s a gigantic Series A even by today’s standards. The financing also marks the previously bootstrapped 1Password’s first external round of funding in its 14-year history. It also represents Accel’s largest single check written in one round. I should note that Slack Fund, WndrCo and Atlassian founders/co-CEOs Scott Farquhar and Mike Cannon-Brookes joined the round. Additionally, Atlassian President Jay Simons, former Google CISO Gerhard Eschelbeck and several other “notable angel investors” participated.

For a reporter who covers tech company fundings, this is an unusual story. But it’s also a very interesting one.

Background

1Password started in Toronto in 2005 and was born out of a recognized need.

Founding couples Dave and Sara Teare and Roustem and Natalia Karimov came up with the idea while they were growing a company that built websites. They realized the struggle of keeping up with passwords.

1Password started out focused on consumers only. And it did that well. The company, which claims to have been profitable since its first year, emphasized user experience, noted CEO Jeff Shiner.

“1Password was started to solve a problem we all feel every day: the hassle of creating and remembering complicated passwords to access the apps we need,” he said.

The company says it helps users create “unique, strong passwords” and auto-fills logins for any site or app with a click, “so they can get more done without remembering–or even knowing–their credentials.”

And it’s done so without tracking users or “monetizing eyeballs,” according to 1Password co-founder Dave Teare.

After about six years, the founders realized they needed help in running the company. That’s when they tapped Shiner to serve as 1Password’s CEO in 2011. WIth his B2B background, Shiner realized there was an opportunity to take 1Password beyond its direct-to-consumer focus.

Left to Right: Dave Teare, Jeff Shiner, Roustem Karimov and Sara Teare

In May 2016, 1Password evolved and began offering its services to business. This move took an already successful company to another level. In three-and-a half years’ time, 1Password has grown to having over 1 million users, including 50,000 customers (including 25 percent of the Fortune 100) using its Enterprise Password Manager (EPM) product globally “to help employees maintain strong credentials, manage access to services and report on usage.”

Growth Abounds

In the past three years, 1Password’s enterprise business has grown over 300 percent and now comprises a majority of the company’s revenue. Customers include IBM, Slack, PagerDuty, Dropbox, GitLab, and Roche, among others. The company declined to provide its valuation.

The move to B2B was a brilliant one, according to Accel Partner Arun Mathew, who told me his firm actually approached 1Password about investing in the company.

“They weren’t looking for outside capital,” he said. “The investment ended up being the single largest check, and largest initial investment, we’ve ever made.”

1Password, Mathew noted, started out as a utility but evolved into a “core part of personal and increasingly corporate, security hygiene.”

Indeed, 1Password says it has created “secure vaults [that]  provide a safe place to share files and data too sensitive for email, while reporting and management tools give IT visibility into breaches and compromised accounts.”

“Over time, particularly over the last four to five years, every organization, every company has faced the risk of being hacked and the chances of sensitive personal information getting out there is getting higher and higher,” Mathew told Crunchbase News. “

Also, as personal and professional lives continue to blur, the need for a password manager that can work on all platforms and both personally and professionally (not just one or the other) becomes increasingly important, Mathew pointed out.

He also compared 1Password to other portfolio companies and fellow investors in this case: Slack, Qualtrics, and Atlassian. Its thesis also falls in line with Accel’s focus on security companies.

“In an era of growth at all costs, we don’t come across companies like 1Password very often,” Mathew said. “Like Atlassian and Qualtrics, the 1Password team impressed us by building a business that’s not only scaling extremely quickly, but also has been profitable since day one.”

Another appealing feature of 1Password is the fact that Mathew had been a user himself for 10 years and 49 of Accel’s active portfolio companies were customers, he said.

“Overwhelmingly what we heard from so many people was that they loved the product,” Mathew added. “Plus, we’re big investors in security.”

After growing organically for more than a decade, 1Password plans to use its new capital to “aggressively” invest in its product and go-to-market programs so that it can continue to grow its enterprise customer base. It also plans to expand its EPM “deeper into the enterprise” so that it can help more businesses do things like prevent breaches.

“It didn’t have salespeople calling companies to push its product,” Accel’s Mathew told me. “It’s very unusual for a company to get to this sort of scale without taking any capital. We realized that if the company could get to this sort of scale organically, we can’t imagine what could happen if we pushed deeper into enterprise.”

As part of the investment, Mathew will be joining 1Password’s board.

The 174-person totally-remote company, which doubled its headcount over the past 18 months, conducts its annual company retreat on a cruise.

It’s also another example of a Canadian company raising large funding rounds in recent months. Last week, we reported on Quebec-based Coveo becoming a unicorn with its US$172 million raise. In September, we covered Montreal-based Element AI’s US$151.4 million massive Series B round. Also in September, we reported on Canada-based Clio raising a massive $250 million Series D round from TCV and JMI Equity.

Illustration: Li-Anne Dias

Photo Courtesy of 1Password