Personal blog of Yzmir Ramirez

After launching its IPO last week with an expected listing price range of $26 to $29 per share, cybersecurity company SentinelOne is going public tomorrow with some momentum behind it. Sources close to the deal tell us that the company, which will be trading under the ticker “S” on the New York Stock Exchange, is expecting to raise over $1 billion in its IPO, putting its valuation at around $10 billion.

Last week, when the company first announced the IPO, it was projected that it would raise $928 million at the top end of its range, giving SentinelOne a valuation of around $7 billion. Coming in at a $10 billion market capitalization would make SentinelOne the most valuable cybersecurity IPO to date.

A source said that the road show has been stronger than anticipated, in part because of the strength of one of its competitors, CrowdStrike, which is publicly traded and currently sitting at a market cap of $58 billion.

The other reason for the response is a slightly grimmer one: Cybersecurity continues to be a major issue for businesses of all sizes, public organizations, governments and individuals. “No one wants to see another SolarWinds, and there is no reason that there shouldn’t be more than one or two strong players,” a source said.

As is the bigger trend in cybersecurity, Israel-hatched, Mountain View-based SentinelOne‘s approach to combat that is artificial intelligence — and in its case specifically, a machine-learning-based solution that it sells under the brand Singularity that focuses on endpoint security, working across the entire edge of the network to monitor and secure laptops, phones, containerised applications and the many other devices and services connected to a network.

Last year, endpoint security solutions were estimated to be around an $8 billion market, and analysts project that it could be worth as much as $18.4 billion by 2024 — another reason why SentinelOne may have moved up the timetable on its IPO (last year the company’s CEO Tomer Weingarten had told me he thought the company had one or two years left as a private company before considering an IPO, a timeline it clearly decided was worth speeding up).

SentinelOne raised $267 million on a $3.1 billion valuation led by Tiger Global as recently as last November, but it has been expanding rapidly. Growth last quarter was 116% compared to the same period a year before, and it now has more than 4,700 customers and annual recurring revenue of $161 million, according to its S-1 filing. It is also still not profitable, posting a net loss of $64 million in the last quarter.

SentinelOne, a late-stage security startup that helps customers make sense of security data using AI and machine learning, announced today that it is acquiring high-speed logging startup Scalyr for $155 million in stock and cash.

SentinelOne sorts through oodles of data to help customers understand their security posture, and having a tool that enables engineers to iterate rapidly in the data, and get to the root of the problem, is going to be extremely valuable for them, CEO and co-founder Tomer Weingarten explained. “We thought Scalyr would be just an amazing fit to our continued vision in how we secure data at scale for every enterprise [customer] out there,” he told me.

He said they spent a lot of time shopping for a company that could meet their unique scaling needs and when they came across Scalyr, they saw the potential pretty quickly with a company that has built a real-time data lake. “When we look at the scale of our technology, we obviously scoured the world to find the best data analytics technology out there. We [believe] we found something incredibly special when we found a platform that can ingest data, and make it accessible in real time,” Weingarten explained.

He believes the real time element is a game changer because it enables customers to prevent breaches, rather than just reacting to them. “If you’re thinking about mitigating attacks or reacting to attacks, if you can do that in real time and you can process data in real time, and find the anomalies in real time and then meet them, you’re turning into a system that can actually deflect the attacks and not just see them and react to them,” he explained.

The company sees Scalyr as a product they can integrate into the platform, but also one which will remain a standalone. That means existing customers should be able to continue using Scalyr as before, while benefiting from having a larger company contributing to its R&D.

While SentinelOne is not a public company, it is a pretty substantial private one, having raised over $695 million, according to Crunchbase data. The company’s most recent funding round came last November, a $267 million investment with a $3.1 billion valuation.

As for Scalyr, it was launched in 2011 by Steve Newman, who first built a word processor called Writely and sold it to Google in 2006. It was actually the basis for what became Google Docs. Newman stuck around and started building the infrastructure to scale Google Docs, and he used that experience and knowledge to build Scalyr. The startup raised $27 million along the way, according to Crunchbase data, including a $20 million Series A investment in 2017.

The deal will close this quarter, at which time Scalyr’s 45 employees will join SentinelOne.

This year, more than ever before because of the COVID-19 pandemic, huge droves of workers and consumers have been turning to the internet to communicate, get things done and entertain themselves. That has created a huge bonanza for cybercriminals, but also companies that are building tools to combat them.

In the latest development, an Israel-hatched, Mountain View-based enterprise startup called SentinelOne — which has built a machine learning-based solution that it sells under the brand Singularity that works across the entire edge of the network to monitor and secure laptops, phones, containerised applications and the many other devices and services connected to a network — has closed $267 million in funding to continue expanding its business to meet demand, which has seen business boom this year. Its valuation is now over $3 billion.

Given the large sums the company has now raised — $430 million to date — the funding will likely be used for acquisitions (cyber is a very crowded market and will likely see some strong consolidation in the coming years), as well as more in-house development and sales and marketing. Earlier this year, CEO and founder Tomer Weingarten told me that an IPO “would be the next logical step” for the company. “But we’re not in any rush,” he said at the time. “We have one to two years of growth left as a private company.”

SentinelOne contacted TechCrunch with the above details but said that an official press release was due only to be released at 3 p.m. U.K. time. We’ll update with more details if they’re available when they are published. In the meantime, other outlets such as Calcalist in Israel (in Hebrew) have also published these details. And it should be noted that the round was rumored for almost a month ahead of this, although the sums raised were off by quite a bit: the reports had said $150-200 million.

(Side note: Why the pointless games with timings and exclusives? Who knows — I certainly don’t. )

This round included Tiger Global, Sequoia, Insight Partners, Third Point Ventures and Qualcomm Ventures . It looks like Sequoia — which is currently building up a new European operation to look more closely at opportunities on this side of the globe — is the only new name in that list. The others have all backed SentinelOne in previous rounds.

It was only in February of this year that SentinelOne had raised $200 million at a $1.1 billion valuation.

The rapid fundraising, from a top-shelf list of firms, is a notable aspect of this story.

In the world of startups, we are firmly living in a time when investors are looking for strong opportunities to back companies that are shining in a market that is particularly challenging. COVID-19 has all but decimated the travel industry and live in-person event industry, among others.

But services that are helping people continue to live their lives, and those that are helping find a cure or at least solutions to minimise the impact, are very much in demand.

The cybersecurity market — in particular companies that are providing solutions that can immediately prove to be effective in what is an increasingly sophisticated threat landscape — is incredibly active right now, even more than it already was.

“Around 450 cybersecurity companies are operating in Israel, constituting 5% of the global cybersecurity market, in some cyber segments the two world leaders are by Israeli founders like CheckPoint and Palo Alto,” noted Avihai Michaeli, an advisor who scouts startups for corporate VCs.

Within that, endpoint security, the area where SentinelOne concentrates its efforts, is particularly strong. Last year, endpoint security solutions was estimated to be around an $8 billion market, and analysts project that it could be worth as much as $18.4 billion by 2024.

While SentinelOne has a lot of competitors — they include Microsoft, CrowdStrike, Kaspersky, McAfee and Symantec — it is also a strong player in the market. Relying on the advances of AI and with roots in the Israeli cyberintelligence community, its platform is built around the idea of working automatically not just to detect endpoints and their vulnerabilities, but to apply behavioral models, and various modes of protection, detection and response in one go.

“We are seeing more automated and real-time attacks that themselves are using more machine learning,” Weingarten said to me this year. “That translates to the fact that you need defence that moves in real time as with as much automation as possible.”

As of February, it had 3,500 customers, including three of the biggest companies in the world, and “hundreds” from the global 2,000 enterprises, with 113% year-on-year new bookings growth, revenue growth of 104% year-on-year and 150% growth year-on-year in transactions over $2 million. Those numbers will have likely grown significantly since then. (We’ll update as and when we learn more.)

As cybercrime continues to evolve and expand, a startup that is building a business focused on endpoint security has raised a big round of funding. SentinelOne — which provides a machine learning-based solution for monitoring and securing laptops, phones, containerised applications and the many other devices and services connected to a network — has picked up $200 million, a Series E round of funding that it says catapults its valuation to $1.1 billion.

The funding is notable not just for its size but for its velocity: it comes just eight months after SentinelOne announced a Series D of $120 million, which at the time valued the company around $500 million. In other words, the company has more than doubled its valuation in less than a year — a sign of the cybersecurity times.

This latest round is being led by Insight Partners, with Tiger Global Management, Qualcomm Ventures LLC, Vista Public Strategies of Vista Equity Partners, Third Point Ventures and other undisclosed previous investors all participating.

Tomer Weingarten, CEO and co-founder of the company, said in an interview that while this round gives SentinelOne the flexibility to remain in “startup” mode (privately funded) for some time — especially since it came so quickly on the heels of the previous large round — an IPO “would be the next logical step” for the company. “But we’re not in any rush,” he added. “We have one to two years of growth left as a private company.”

While cybercrime is proving to be a very expensive business (or very lucrative, I guess, depending on which side of the equation you sit on), it has also meant that the market for cybersecurity has significantly expanded.

Endpoint security, the area where SentinelOne concentrates its efforts, last year was estimated to be around an $8 billion market, and analysts project that it could be worth as much as $18.4 billion by 2024.

Driving it is the single biggest trend that has changed the world of work in the last decade. Everyone — whether a road warrior or a desk-based administrator or strategist, a contractor or full-time employee, a front-line sales assistant or back-end engineer or executive — is now connected to the company network, often with more than one device. And that’s before you consider the various other “endpoints” that might be connected to a network, including machines, containers and more. The result is a spaghetti of a problem. One survey from LogMeIn, disconcertingly, even found that some 30% of IT managers couldn’t identify just how many endpoints they managed.

“The proliferation of devices and the expanding network are the biggest issues today,” said Weingarten. “The landscape is expanding and it is getting very hard to monitor not just what your network looks like but what your attackers are looking for.”

This is where an AI-based solution like SentinelOne’s comes into play. The company has roots in the Israeli cyberintelligence community but is based out of Mountain View, and its platform is built around the idea of working automatically not just to detect endpoints and their vulnerabilities, but to apply behavioral models, and various modes of protection, detection and response in one go — in a product that it calls its Singularity Platform that works across the entire edge of the network.

“We are seeing more automated and real-time attacks that themselves are using more machine learning,” Weingarten said. “That translates to the fact that you need defence that moves in real time as with as much automation as possible.”

SentinelOne is by no means the only company working in the space of endpoint protection. Others in the space include Microsoft, CrowdStrike, Kaspersky, McAfee, Symantec and many others.

But nonetheless, its product has seen strong uptake to date. It currently has some 3,500 customers, including three of the biggest companies in the world, and “hundreds” from the global 2,000 enterprises, with what it says has been 113% year-on-year new bookings growth, revenue growth of 104% year-on-year and 150% growth year-on-year in transactions over $2 million. It has 500 employees today and plans to hire up to 700 by the end of this year.

One of the key differentiators is the focus on using AI, and using it at scale to help mitigate an increasingly complex threat landscape, to take endpoint security to the next level.

“Competition in the endpoint market has cleared with a select few exhibiting the necessary vision and technology to flourish in an increasingly volatile threat landscape,” said Teddie Wardi, managing director of Insight Partners, in a statement. “As evidenced by our ongoing financial commitment to SentinelOne along with the resources of Insight Onsite, our business strategy and ScaleUp division, we are confident that SentinelOne has an enormous opportunity to be a market leader in the cybersecurity space.”

Weingarten said that SentinelOne “gets approached every year” to be acquired, although he didn’t name any names. Nevertheless, that also points to the bigger consolidation trend that will be interesting to watch as the company grows. SentinelOne has never made an acquisition to date, but it’s hard to ignore that, as the company to expand its products and features, that it might tap into the wider market to bring in other kinds of technology into its stack.

“There are definitely a lot of security companies out there,” Weingarten noted. “Those that serve a very specific market are the targets for consolidation.”