Sysdig Raises $350 Million in Series G Financing, Total at $744 Million

Sysdig, Inc., in unified container and cloud security, raised a $350 million series G funding round at a valuation of $2.5 billion – bringing total funding to $744 million and more than doubling the company’s valuation in 8 months.

The financing was led by Permira‘s growth fund. Guggenheim Investments joined this round on behalf of select clients, alongside existing investors Accel, Bain Capital Ventures LLC, DFJ Growth, Glynn Capital, Goldman Sachs, Insight Partners, Next47, Premji Invest & Associates, and Third Point Ventures.

Sysdig empowers organizations to confidently secure the cloud by providing real-time threat detection to eliminate security blind spots and one-click remediation to close the loop. With its platform, teams detect and respond to runtime threats, and continuously manage configurations, permissions, vulnerabilities and compliance for containers, Kubernetes, and cloud services. The firm partners with cloud providers, including AWS, Google Cloud Platform, Azure, IBM Cloud, Red Hat, and SUSE Rancher.

This funding will be used to accelerate firm’s global expansion in Europe, the Middle East, AsiaPac, and South America, double its headcount in 2022, expand its partner program and invest in an unified multi-cloud security experience across runtime, configurations, permissions, and vulnerabilities.

The company’s platform is built on an open source foundation, including Falco and open source Sysdig, standards for container and cloud threat detection and incident response. Open source drives transparency and more effective solutions through a community of contributors who crowdsource security policies, report issues, contribute features, and fix bugs. Since contributing Falco to the Cloud Native Computing Foundation, Falco has been downloaded over 37 million times, with a 335% increase since becoming an incubating project in the CNCF in January 2020.

Sysdig Milestones:
• Annualized revenue run rate from security more than tripled in the last 12 months. Strong pattern of expansion by customers demonstrated by an annual net revenue retention (NRR) of 149% as of the most recent quarter.
• Customer base increased 140% Y/Y, and includes nearly 700 customers. The start-up has an average annual recurring revenue of more than $875,000 across the top 50 purchasing customers.
• Rapid global expansion has led to a doubling in sales and marketing teams Y/Y with employees across 5 global offices and in more than 20 countries.
• In August, Sysdig acquired Apolicy, expanding its platform to include infrastructure as code (IaC) security. The firm introduced guided remediation for IaC manifests and out-of-the-box integration with GitHub, GitLab, Azure DevOps, and Bitbucket to provide risk and policy feedback on IaC pull requests. Additionally, the company added cloud configuration risk management and cloud infrastructure entitlements management (CIEM) to its platform this year.
• In August, the company was recognized as a representative provider in 2021 Gartner Innovation Insight for Cloud-Native Application Protection Platforms Report. [1]

Sysdig has emerged as an unified container and cloud security leader. It has experienced a 300% increase in its Secure sales in the last 12 months. Over the last year, it expanded its SaaS hosting locations from 9 to 16, including the addition of Australia earlier this year. Over the past few months, it has invested in its partner program. On November 1, it announced all deals outside the Global 500 will be indirect.

Suresh Vasudevan, CEO, said: “We’ve seen massive investor interest in Sysdig as the cloud security market is experiencing hyper growth. Cloud adoption has accelerated into the mainstream, and as a result, demand for Sysdig and Falco have skyrocketed. Cloud security teams quickly realize the importance of runtime threat detection for containers and cloud, and Sysdig is the clear choice.”

Alex Melamud, principal, Permira, said: “The genal shift to cloud and containers requires security that is able to detect and respond to threats in real time. The question is no longer if companies will adopt cloud security solutions, but which solution to choose – and Sysdig has emerged as the clear unified container and cloud security leader. As a rapidly growing industry leader at scale, Sysdig perfectly aligns with our investment approach, and we look forward to leveraging our global platform, and software and security expertise to help them achieve their growth objectives.”

Ping Li, partner, Accel, said: “Accel partnered with Sysdig early on. We believe that organizations need a unified cloud and container solution that spans development to production. Sysdig has proven its ability to scale, is based on open source, and deployed as SaaS, a winning formula. Today, they are the clear leader in runtime security for cloud and containers.”

Rory Twomey, VP, Guggenheim Investments, said: “Guggenheim Investments is delighted to help Sysdig further its position as the leader in secure DevOps and address the security challenges of modern cloud applications. We look forward to watching the company capitalize on the significant opportunities ahead of them.”

Appointments
Sysdig also announced that Karen Walker has joined the company as CFO and Paul Whitney has joined as chief human resource officer.

Karen Walker brings more than 20 years of experience in leadership roles at companies that include, PagerDuty, Uber, Pandora Media, Virgin America, and CBS Interactive. Throughout her career, she has scaled finance teams in high growth and global organizations, led IPO readiness, and supported ten acquisitions.

Paul Whitney has international experience supporting organizational performance through cultivating company culture and helping people realize their potential. Prior to joining, he served as chief people officer at Cohesity and Databricks, and he has led 2 past companies through IPOs.

Market Momentum
• According to Gartner, “By 2023, 70% of all enterprise workloads will be deployed in cloud infrastructure and platform services, up from 40% in 2020.” [2]
• IBM found that the average cost of a breach for companies operating in public cloud is $4.8 million. [3] According to its report, companies that are “further along in their cloud modernization maturity were able to identify and contain breaches 77 days faster than those in the early stages of modernization.” The study also found that reducing time to identify and contain a breach reduces the cost of breach.

Resources
• Customer stories
• Blog from CEO
• Background information
• April 2021 funding announcement

[1] Gartner, Innovation Insight for Cloud-Native Application Protection Platforms, Neil MacDonald, Charlie Winckless, August 25, 2021
[2] Gartner, Hype Cycle for Cloud Security, 2021, Tom Croll, Jay Heiser, July 27, 2021
[3] IBM, How much does a data breach cost?, 2021