Kiteworks Raises $456M at a $1B+ Valuation to Help Secure Sensitive Data

Tag another unicorn and a big round of funding for the cybersecurity industry: Kiteworks, a company that makes tools to secure email communications, file sharing and other situations where people work with sensitive or proprietary data outside their firewalls, raised $456 million in funding from Insight Partners and Sixth Street Growth. The investment values ​​the company at more than $1 billion.

It’s a significant development for San Mateo-based Kiteworks, which was formerly known as Accellion and was the subject of a major data breach in 2021. That incident, involving legacy services, affected at least 300 organizations, including Morgan Stanley, the University of California, Kroger and Shell.

Fast forward to today, and Kiteworks—also the name of the company’s flagship product—is doing well. It’s profitable and has been for two years. And its tools span 100 million end users and more than 3,650 global enterprises and government agencies.

This cash injection comes at a time when cybersecurity breaches continue to plague users and organizations — yet the overall funding environment for startups remains challenging.

This has led to cybersecurity firms that are doing well to start forming themselves as consolidators. Wiz raised $1 billion earlier this year to acquire smaller players, and that is the case with Kiteworks as well.

Kiteworks said it intends to use the money partly for acquisitions.

“We have a pretty aggressive M&A strategy that we started about a year and a half to two years ago,” Chief Strategy Officer Tim Freestone said in an interview. “This will help fund the continuation of that strategy over the next four years.” Since 2022, Kiteworks has acquired four smaller startups. It will also use the funds for hiring, R&D, and business development, he added.

The cybersecurity industry is seeing rapid, prolific startup growth—in part because the threats we address are constantly evolving and enterprising technologists are eager to seize those opportunities. You could say that Kiteworks represents the other side of the cybersecurity story.

The company has been operating as a private enterprise for over 20 years, so it is not a “startup” in the classic sense of the word.

While much of the focus in recent years has been on areas such as cloud, network/infrastructure, and application security, Kiteworks has focused on the area of ​​data, and in particular how to secure sensitive data, whether it resides on-premises, in the cloud, or somewhere else entirely, such as a line of information entered into a web form.

“As an industry, we finally got to the data layer, and that helped us,” Freestone said.

One of Kiteworks’ unique selling points is its specific approach to handling sensitive data as part of what it calls a private content network, or PCN (not to be confused with the other PCN in infosecurity, which stands for process control network). Government organizations, or those looking to become suppliers to these organizations, must pass through a solid layer of data protection compliance to be able to work with them.

Kiteworks claims to currently be the “only FedRAMP-authorized security platform” in the U.S. that provides support activities such as file sharing, file transfers, and email communications to meet these compliance requirements. Some of its solutions are creative: a DRM tool that makes a document appear “real” to the recipient so they can work with it, but is actually a facsimile, ensuring that most of the data never leaves the sender’s firewall.

“This investment strengthens Kiteworks’ role in addressing the challenges of managing sensitive data,” said Jonathan Yaron, CEO and president of Kiteworks (pictured below). “We are committed to accelerating our growth and continuing to innovate to meet the evolving needs of our customers.”

The co-investment by Insight Partners and Sixth Street Growth is a mix of primary and secondary shares in the company. The company doesn’t disclose the ratio of primary to secondary shares, but PitchBook data from early July indicates the first tranche of the total amount, designated as growth capital, was $228 million.

Insight, which has invested more than $4.5 billion in cybersecurity (including in Wiz), believes it is time for Kiteworks to double down on its efforts.

“With the rise of third-party cybersecurity threats and stringent regulatory requirements, Kiteworks has a significant market opportunity for both organic and inorganic growth,” Eoin Duane, managing director of Insight, told TechCrunch in an email. “Customers love Kiteworks PCN—there’s strong growth within the existing customer base, and as data security becomes increasingly important, the company is well-positioned to attract new customers.”