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Zscaler gets £24m VC fund for increased cloud security

Zscaler, the SaaS cloud security company, has for the first time received venture capital investment to the tune of £24 million ($38m), mainly from Lightspeed Venture Partners.

The San Jose startup was traditionally funded internally, but according to Zscaler the money will be used to “further accelerate its go-to-market strategy, and further develop its cloud security offering with a high emphasis on mobility”.

In other words: it’s not because Zscaler needs the cash, more upgrading what it already has.

And according to CEO Jay Chaudhry, it represents a shift in company policy.

“To date, we have resisted outside investment despite inquiries from top-tier investors,” he said, adding: “Our new strategic partners share our vision and are committed to helping Zscaler build a long-lasting business”.

Zscaler’s security solution revolves around a unified SCG (Secure Cloud Gateway) and famously requires no hardware or software to enforce multiple security policies. As Ravi Mhatre, MD of Lightspeed Ventures noted: “Many web security vendors are putting appliances in the cloud and calling it cloud security”.

Given its security credentials, Zscaler is a founder member of the Cloud Security Alliance (CSA), who recently launched the Big Data Working Group.

Chaired by representatives from Fujitsu – who jointly announced the group with the CSA – eBay and Verizon Wireless, the group will address solutions to current big data challenges.

Plenty of cloud organisations have succumbed to venture capital (VC) money of late. CloudPassage hit £8.8m ($14m) in April from a round of VC funding, while Bit9 made £21.7m ($34.5m) from funding last month.

Zscaler has built up an impressive number of customers – 2600 customers in over 100 countries – as well as a base of clients in its four year history, including Telefonica and Lay-z-boy.

Is this a prevalent trend of cloud security companies taking venture capital funds in order to expand?

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Categories: SaaS , Security, Strategy
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