Cybersecurity Venture

Sysdig Hits $2.5B Valuation As Cloud And Container Security Continues To Bring The Heat

San Francisco-based cybersecurity company Sysdig more than doubled its valuation to $2.5 billion in just eight months with a new $350 million Series G.

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The round was led by Permira’s growth fund. Guggenheim Partners also came aboard as a new investor, joining existing investors PremjiInvest and Third Point Ventures. Also participating were Accel, Bain Capital Ventures, DFJ Growth, Glynn Capital, Goldman Sachs, Insight Partners and Next47. The company has now raised $744 million since being founded in 2014.

News about Sysdig raising a large round of money and hitting a big valuation may sound familiar. It was just in late April when the company announced a $188 million Series F at a $1.19 billion valuation.

Sysdig CEO Suresh Vasudevan said the company was contacted by investors wanting to get in on the next round less than a week after the Series F was announced. In late August, the company decided it would do another raise due to that interest and was able to close fundraising in about three weeks.

“The market is just red hot right now,” he said.

Big money goes to the cloud

Sysdig provides cloud and container security for enterprises and their DevOps teams. The space has continued to see unrivaled interest as more companies move to cloud, along with adopting container strategies to build out applications—with open-source platform Kubernetes becoming the dominant way to deploy and manage those containers.

The company is part of what is becoming an arms race in the sector as investors have flooded cash into companies that focus on Kubernetes, containers and cloud application security.

In January, San Jose-based Lacework closed a $525 million round valuing the company at more than $1 billion. Then, just last month the company closed a $1.3 billion Series D round led by Sutter Hill Ventures, Altimeter Capital, D1 Capital Partners and Tiger Global Management. The new investment sets a valuation of $8.3 billion for the 7-year-old company.

Similarly in March, Los Angeles-based Orca Security landed a $210 million Series C — giving it a $1.2 billion valuation. Then in October, the  company, a provider of cloud security, extended its Series C round by $190 million, bringing total capital raised for the round to $550 million. Temasek led the latest tranche—which boosted Orca’s valuation 50 percent in seven months to $1.8 billion.

Sysdig differentiates itself from its competitors by being the most complete cloud, DevOps and container security platform available, Vasudevan said. The company plans on using the new funds—and its previous Series F which is still in the bank—to triple its sales and marketing department, as well as for continued development on the platform and to grow geographically, he said.

In just the last eight months, the 500-person company has grown its enterprise customer base from about 450 to nealy 700, with an average annual recurring revenue of more than $875,000 for its top 50 contracts.

With the move to the cloud and more and more software being built—and updated—using containers, the sector could be the largest emerging area cybersecurity has seen since the endpoint detection and response (EDR) space erupted years ago and produced large public companies such as SentinelOne and CrowdStrike, as well as numerous valuable M&A exits.

“The cloud security opportunity is even more unbounded (than EDR) since it’s a new category riding the two most significant transformations in IT–shift to cloud and shift to developers—and we will see bigger ‘winners,’” said Ping Li, a partner at Accel.

Illustration: Dom Guzman

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