Investors Search for IPO 'Unicorns' Among Cyber-Security Startups
Investors continue to pour cash into cyber-security ventures hoping for big initial public offering payoffs, but workforce issues and technology complexity add to the risk.Driven by a seemingly unending parade of breaches, investors looking for the next big score—the rare "unicorn" company that becomes valued at $1 billion or more—are pouring money into security startups and early-stage ventures. So far in 2015, cyber-security firms received more than $1.2 billion in nearly 100 funding deals in the first two quarters, putting the year on track to match last year's record pace, according to investment tracking firm CB Insights. Over the past eight quarters, investors put more the $4.6 billion into cyber-security firms, the firm stated. In the latest such deal security-in-the-cloud company Zscaler announced it closed a $100 million round of funding from a group of investors, adding to the $38 million it had previously received. Dan Druker, chief marketing officer for the company, hesitated at divulging the on-paper valuation of the company, except to say that it had reached an estimated value of more than $1 billion. Because Zscaler did not take early funding—the company was self funded by founder and CEO Jay Chaudhry—the company had few problems reaching its lofty valuation, Druker told eWEEK. "Because of the funding model, we are not just a unicorn, but more like a unicorn sliding down a rainbow," he said.
It's a claim that every startup would like to make. And because of the heated activity in cyber-security, Zscaler is unlikely to be the last security firm to claim the status.