Lacework Raises $1.3B On $8.3B Valuation To Expand Channel

Lacework has become the third most valuable venture-backed cybersecurity company in the world, raising $1.3 billion on an $8.3 billion valuation to double down on the channel. 

The San Jose, Calif.-based cloud security vendor plans to use the Series D proceeds to carry out select acquisitions, expand in Europe and Asia-Pacific, and work more efficiently with channel partners, said CFO Mike Staiger. Lacework’s Series D is the largest funding round in security industry history, and was led by Sutter Hill Ventures, Altimeter Capital, D1 Capital Partners, and Tiger Global Management. 

“We’ve had some pretty extraordinary sales performance, and it’s clear the market is big and growing quickly,” Staiger said. “It’s a great vote of confidence for us to be able to raise this much this soon.”

[Related: Lacework Snags Facebook Engineer Lead Jay Parikh As Co-CEO]

Channel partners have influenced more than 60 percent of Lacework’s new business in recent quarters by either sourcing the opportunity themselves or executing a lead that was provided by the company, Staiger said. Lacework would like to see its share of business that’s influenced by partners continue to grow, said Staiger, who declined to disclose the number of channel partners Lacework works with. 

Solution providers should expect to see more investment from Lacework in experienced people who have experience managing partner relationships and working on channel teams, Staiger said. In addition, Staiger said Lacework intends to work with its partners to crystalize its message around the company and product and create solution provider programs that are thoughtful and effective.

“You can’t get a good partner to the channel without significantly investing,” Staiger said. “The channel is going to be really, really important to us going forward.” 

From a product standpoint, Staiger said Lacework intends to use the $1.3 billion to both broaden its functionality to cover a wider range of use cases as well as deepen its functionality to better serve existing use cases. The money will allow also Lacework to pursue select acquisitions that would enhance the company’s platform in a manner that’s both cost effective as well as time effective, Staiger said. 

Lacework made the first acquisition in its nearly seven-year history last week, purchasing cloud infrastructure management vendor Soluble to quickly detect and fix code misconfigurations and policy violations. Future acquisitions will likely be focused on helping the company get new features and capabilities to market more quickly than organic development would allow, according to Staiger. 

“We continue to invest in this platform for the long run,” Staiger said. “We’re treating cloud security as a data problem, and we’re attacking it in a novel way. I think we’ve got the best platform in the marketplace.” 

Thursday’s funding round propelled Lacework’s valuation past fellow security upstarts Netskope, Wiz, OneTrust and Arctic Wolf, and behind only endpoint visibility and control vendor Tanium and application security vendor Snyk, which are worth $9 billion and $8.5 billion, respectively. 

The bulk of Lacework’s more than 700 employees are based in North America, but Staiger said the company’s European expansion is well underway while its push into Asia-Pacific began over the last several months. Lacework is already seeing good traction in the United Kingdom, Germany, France and the Nordic countries in Europe as well as very quick growth in Australia and New Zealand, Staiger said. 

Lacework has more than tripled its headcount over the past nine or 10 months, with the personnel expansion fairly split between go-to-market and engineering, according to Staiger. Staiger isn’t sure the company’s employee count will grow at such an aggressive rate going forward, though he does expect to see more sales and field marketing personnel abroad to drive international growth. 

From a metrics standpoint, Staiger said Lacework is most focused on bookings, sales effectiveness, sales performance, and the role of the channel in topline growth. Specifically, Staiger said Lacework is focused on how quickly sales personnel close their first opportunity as well as how quickly they hit their quotas and other milestones.

“We want to invest aggressively in forming and building the relationships that are going to help us grow in all regions worldwide,” Staiger said. “There’s great strength in the diversity of the channel.”

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