Cybersecurity is a massive sector, but startups in the category are more likely to be acquired than go public. Even Wiz, which for a time held the title of the fastest-growing startup, abandoned its IPO ambitions when it agreed to sell to Google[1] earlier this year.
In the past few years, there have been scant few significant cybersecurity debuts such as SentinelOne[2] in 2021, and Rubrik[3] last year.
Next week, the sector is expected to add one more public company: the cloud cybersecurity platform Netskope. The 13-year-old startup also shares its earliest and largest investor with Rubrik: Lightspeed Venture Partners.
The large Silicon Valley firm had a 23.9% ownership of Rubrik when it went public at $6.6 billion last year. In the case of Netskope, Lightspeed owns 19.3% of the company that aims to achieve a valuation of as much as $6.5 billion, according to the updated S1 filing[4].
Lightspeed first backed Netskope in 2013, leading the company’s $21 million Series B.
The company set its IPO price between $15 and $17 per share, and at the upper end of that range, it would be valued at $6.5 billion, giving Lightspeed an approximately $1.1 billion windfall, in terms of the value of its stake.
The Netskope’s other major investors include ICONIQ Growth, which holds 19.2% of the company’s stock, followed by Accel with a stake of nearly 9%.
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Netskope is known as a Secure Access Service Edge (SASE) provider. It offers cybersecurity for an enterprise’s cloud infrastructure, with such products as secure web gateways and firewall as a service. The company’s main competitors are Zscaler and Palo Alto Networks.
The company was last valued at $7.5 billion, when it raised a $300 million Series H led by ICONIQ Growth in 2021, the height of the ZIRP era. It also took on a $401 million[5] convertible note in 2023.
But those capital infusions weren’t enough to get Netskope to profitability. For the first half of the year, Netskope’s revenue grew to $328.5 million from $251.3 million a year ago. During that time, its net loss narrowed to $169.5 million from $206.7 million, the filing shows.
If Netskope goes public at a valuation of $6.5 billion, the company would be among a number of VC-backed companies that have recently debuted below[6] their final private market valuation.
Other companies that went public below their latest private valuations include Chime[7] and Hinge Health[8]. But not all new listings are being met with caution. Some recent IPOs, like Figma[9] and Circle[10], have soared on the first day of trading.
References
- ^ sell to Google (techcrunch.com)
- ^ SentinelOne (techcrunch.com)
- ^ Rubrik (techcrunch.com)
- ^ S1 filing (www.sec.gov)
- ^ $401 million (www.crn.com)
- ^ debuted below (techcrunch.com)
- ^ Chime (techcrunch.com)
- ^ Hinge Health (techcrunch.com)
- ^ Figma (techcrunch.com)
- ^ Circle (techcrunch.com)