Today Centrify announced that we have raised $42 million in funding, thereby bringing our total amount raised to more than $94 million. This is a huge milestone for Centrify and the $6 billion Identity and Access Management (IAM) market — especially the soon-to-be $1 billionIdentity-as-a-Service sub-segment of the IAM market. Centrify now represents one of the most well-funded private companies in the IAM market, as well as one of the fastest growing vendors in the IAM market that at the same time has also reached critical mass in terms of revenue, customers, employees, partnerships, etc. In this blog post I will talk about the details of this round of financing, who our new investors are, the key milestones we attained to be able to raise such a great round of financing, and what this means for the IAM market in general.
But let’s first talk about the interest in investing in Centrify vis a vis the backdrop of the identity market that we participate in. The reality is that as the world of IT becomes more “de-perimeterized”— i.e. IT shifts from solely being on-premises to a hybrid of on-premises and cloud and mobile — what IT can and should secure dramatically changes. In the new world of end users using their iPad at Starbucks to access Salesforce, Google Apps, etc., the need for traditional security solutions such as anti-virus, firewalls, etc., significantly diminishes. Securing users’ identities rises in importance, especially as users are given more devices, more cloud apps, etc., that they need to access and are being handed more and more usernames and passwords. At the same time IT is also struggling to get control and visibility over whom has access to what in a world of “shadow IT” where end users are bringing their own devices (“BYOD”), bring their own apps (“BYOA”) such as Dropbox, etc.
In effect the move to cloud and mobile (“de-perimeterization”) coupled with users using a wider range of devices and apps (“increasing IT heterogeneity”) coupled with the Bring Your Own movement (“shadow IT”) has created an “Enterprise of Things” world that needs to be secured, with a user and their digital identity squarely in the middle of this.
The resulting complexity that emerges from an “Enterprise of Things” world is significant. Users’ productivity is impacted as they are given more and more accounts and passwords, and they want self-service for their devices and apps but it is harder to deliver given device and app sprawl. From a security perspective, “Shadow IT” leads to lack of control and visibility, and IT staff often tends to cut corners by sharing privileged accounts to these disparate systems and apps, leading to a greater attack surface and risk of inside threats. And of course, the more usernames and passwords each user is given, the chance of a password being stolen increases, and the need for stronger form of authentication (e.g. multi-factor authentication) becomes more critical. And operational efficiency is impacted as IT wants a single “big easy button” to completely provision/de-provision a user, as well as a single pane of glass to control who can access what.
So it is no wonder that the overall market for IAM is growing at a rate higher than overall IT spend and security, and that cloud identity (aka “Identity-as-a-Service” or “IDaaS”; i.e. IAM delivered as a cloud-based service) in particular is growing at a blistering rate. In fact, per Gartner IDaaS will grow from a $500 million market in 2013 to $1.24 billion in 2017 for a total 28.3% combined annual growth rate — far outpacing most high-growth markets within IT.
It is against this backdrop that Centrify has emerged as a leader in identity management as we can uniquely address identity across data center, cloud and mobile. Our comprehensive and differentiating technology, our great team, and being in a high-growth market has led to Centrify to a stellar 2013 calendar year as Centrify posted record total sales that grew more than 40 percent over the prior year.
This success has also led us to consider additional investment in our company as we continue our trajectory. We had planned to raise $25-30 million to primarily expand internationally and also do some M&A, but we had such strong interest from investors that in the end we raised more than $42 million. In addition, we had considered traditional Venture Capital for funding, but also felt we could get further our business relationships with some of our strategic partners if we got some of these partners to join traditional VC investors and also invest in us and help take the business relationships to the next level.
Hence we are not only pleased to have our round of financing be very much oversubscribed, with participation from all of our current investors (Mayfield, Accel Partners, Sigma West and Index Ventures) plus some new venture firms (Northgate, Keating Capital and Adveq), but also have participation by strategic investors Samsung Ventures (the venture arm of Samsung, the world’s largest mobile device provider), Fortinet Inc. (a large public network security company) and Docomo Capital (the corporate venture capital arm of NTT Group, Japan’s leading ICT service provider). I want to personally thank all the people at those great firms for believing in Centrify and our vision and for investing in us. And of course a big thank you to our customers, partners and employees who have made Centrify the leader we are and will continue to be.
As part of this funding announcement, I am also pleased to announce that to further foster the company’s growth, global expansion and brand awareness, Centrify also added two executives — Mark Weiner and Ally Zwahlen — to our leadership roster. With extensive experience in cloud, data center and networking sectors, along with a proven track record with the IPO process and advising public companies, Mark will serve as Centrify’s chief marketing officer and join the company’s executive management team reporting directly to me. Formerly of McAfee and AVG, Ally will assume the position of vice president of corporate communications and brings a deep understanding of the security and SaaS markets, trends and influencers. Welcome on board Mark and Ally!
Our goal as a company has always been about providing the best identity management solutions for our customers. With this funding and new talent, I’m confident that we will continue to innovate and find ways to disrupt the industry given our unique ability to address identity across cloud, mobile and the data center. And as key partners like Samsung, Fortinet and NTT DOCOMO validate our unified approach, the future is increasingly bright for the identity market, and even brighter for Centrify.