Cato Networks, which claims to be the provider of the world’s first secure access service edge (SASE) platform, has announced its largest funding round to date, an amount worth $130m, to bring total investment in the company to a third of a billion dollars.
The round was led by Lightspeed Venture Partners, with participation of a new investor, Coatue, and existing investors Greylock, Aspect Ventures, Acrew Capital, Singtel Innov8 and Cato Networks CEO and co-founder Shlomo Kramer.
Before the round, Cato put its market valuation at $1bn, reflecting its strong leadership of the SASE market. The company will deploy the new funds to further strengthen its financial position and accelerate its SASE market and technology expansion strategy.
With the drastic increase in remote working due to the Covid-19 outbreak, SASE has come of age rapidly since the term was first coined by research firm Gartner in August 2019, when it published its paper The future of network security is in the cloud, detailing how SASE is the natural evolution of two trends: network as a service and network security as a service.
SASE offerings have the potential to upend traditional networking and security. A summer 2020 investigation into the attitudes of IT leaders in the post-Covid-19 environment found that despite the emergence and rapid take-up of software-defined wide-area networking (SD-WAN), 55% of organisations favour the emerging single cloud service model of SASE, which converges SD-WAN features with cloud-based security services for remote workers and devices.
Cato sees SASE as a multibillion-dollar market that will become increasingly competitive and says it is gearing up for the fight ahead by expanding its ability to build out SASE services and go-to-market capabilities.
Cato calculates its cash runway as being over $240m, which it is confident will give it enough operational capability for the foreseeable future. It is confident that the cash injection will provide the financial viability needed to replace incumbents in large enterprise deals, as well as consider strategic acceleration of its product roadmap. Furthermore, it says it will end 2020 with 270 employees globally, rising to about 385 by the end of 2021 as a reflection of the growth it plans.
Given such dynamics, Cato believes its investors appreciate its business momentum, growing and retaining its customer base. It adds that investors share its view of the huge SASE market opportunity and the way that Cato is built, fully focused on SASE in engineering, sales, marketing and operations.
Cato also believes the fact that it is currently valued higher than all pure-play SD-WAN suppliers that have been acquired in the past few years is indicative of the SASE market opportunity being larger than SD-WAN. It confidently predicts that by the end of 2020 it will have doubled its bookings compared with 2019, adding to wins such as the multimillion-dollar deal it signed in the third quarter with a global manufacturing customer that standardised on Cato for its global WAN and security architecture in a full SASE deployment.
“SASE is the hottest area in IT, and this funding round further attests to Cato’s leadership of the SASE market,” said Kramer, commenting on the deal. “Only the Cato Cloud was built from the ground up as converged and cloud-based global SASE service.”
Yoni Cheifetz, a partner at Lightspeed Venture Partners, added: “SASE will transform the multibillion-dollar markets for enterprise networking and security, and we believe Cato will lead this transformation. Cato’s architecture is purposely built to enable IT to support current and future business requirements, such as the need to dynamically support secure and optimised work from anywhere.”