Private equity powerhouse Thoma Bravo continued its security software investment blitz by buying a majority stake in machine identity management software provider Venafi.
The controlling stake officially marks Venafi’s debut as a “unicorn” with the privately held company’s valuation breaking the $1 billion barrier to $1.15 billion.
“Thoma Bravo invests in category creators and leaders,” said Venafi CEO Jeff Hudson (pictured), whose leadership has put Venafi at the vanguard of the machine identity management market. “That ($1.15 billion) valuation is a good valuation. It makes us a Unicorn...This is a pivotal moment for us. We have done a lot to get to this place and now the market is exploding.”
Thoma Bravo recognizes that the future is machine dominated and demands a software platform the likes of Venafi to secure and manage the identities of those machines, said Hudson. “They are investing right at time when we have gone from nobody knowing anything about this when I joined the company to now it is taking off,” he said.
The world is now dominated by machine interactions, said Hudson. “Every human interaction is intermediated by machines,” he said. “All the systems that keep us going--whether it’s DoorDash or something else--is all machines. They all have to have identities and those identities need to be managed -- otherwise bad things happen. That is the vision Thoma Bravo bought into and that is where we are going.”
Venafi is leading the way on machine identity management security similar to how Okta has staked out a leading position in the human identity security market and now has a $32.08 billion market capitalization, said Hudson.
Among Thoma Bravo’s other security software investments are its $3.9 billion acquisition of Sophos earlier this year; Centrify in 2018; Imprivata in 2016; DigiCert in 2015; and Sailpoint in 2014.
The COVID-19 pandemic has accelerated the machine identity management market with the perimeter literally disappearing because of the work at home explosion, said Hudson. “Bam with COVID the whole perimeter is gone, so everything is on the edge,” he said.
The era of firewall security is a thing of the past, said Hudson. “The firewall is gone,” he said. “You have to do security at the application level, at every point where there is access to something and it is based on identity.”
The Thoma Bravo investment is the culmination of a decade of hard work by Hudson and his team establishing Venafi as a leader in the identity management market. When Hudson first took the helm at Venafi in October 2010, the company had only five customers and 20 employees with less than $1 million in annual revenue
“It was a lot of sweat and hard work,” he said of the aggressive Venafi buildout and machine identity management vision that led to the big Thoma Bravo investment. “Machines have become so much more important in our lives…With the perimeter having disappeared, the only way you can secure is through identity.”
Venafi said the Thoma Bravo investment will allow the Salt Lake City, Utah, company to accelerate technology innovation and channel growth as it continues to expand its machine identity management footprint.
“For the channel this is really great because we are just now seeing the world’s corporations starting to get into this, because of the proliferation of machines,” he said. “You have got things on the edge, ATMs and all kinds of kiosks and cash registers.”
Venafi – which does not reveal the percentage of sales through partners or direct -- has already begun building out a channel and has a relationship with security solution provider behemoth Optiv, said Hudson.
“The channel is massively important in this because it integrates a lot of things together,” he said. “That is where the channel does really well. They don’t do really well on a rifle shot. They do really well when a lot of pieces come together. There is a huge future ahead in this for the channel.”
Nalit Patel, CEO of All Solutions, a Livingston, N.J., solution provider, said the Thoma Bravo investment in Venafi is one more sign of the need for increased security on machines of all kinds.
“With security today you need to look at it from a holistic perspective,” said Patel. “When you park your car you don’t leave it unlocked – just as you would not leave your home unlocked. We have Ring doorbells for security so we can see who is coming to our front steps.”
One sign of the need for the Venafi solutions is the Target breach in 2013, which came as a result of a heating, refrigeration and air conditioning company that had access to the Target network.
“That HVAC access led to the Target credit card breach,” Patel said. “That shows the importance of device security and identity management.”
Michael Goldstein, CEO of LAN Infotech, a Fort Lauderdale, Fla., solution provider, said he sees Venafi filling a void in the security software market. “Machine security management is something that is grossly overlooked both in business and the consumer market,” he said. “Everything is plug and play, network ready today--so you need software like that provided by Venafi to be able to secure and manage the wide range of devices out there.”
One sign that the machine identity management market is in full swing is the increasing number of machine devices that are regulating everything from room and temperature control to airflow in the COVID-19 era, said Goldstein. “You have to think about how you control and manage every internet of things machine,” he said.
Hudson, for his part, sees a bright future ahead with Thoma Bravo, which joins existing investors TCV and Foundation Capital. “Thoma Bravo is the leading growth equity investor in cybersecurity,” he said. “They do more of this anybody else…We have a vision together that is completely the same.”
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December 11, 2020 at 07:22AM
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Machine Identity Management Unicorn: Thoma Bravo Majority Stake Drives Venafi Valuation To $1.15B - CRN
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