Cato Network snags $130M Series E on $1B valuation as cloud wide area networking thrives
Cato Networks has spent the last five years building a cloud-based wide area network that lets individuals connect to network resources regardless of where they are. When the pandemic hit, and many businesses shifted to work from home, it was the perfect moment for technology like this. Today, the company was rewarded with a $130 million Series E investment on $1 billion valuation.
Lightspeed Venture Partners led the round with participation from new investor Coatue and existing investors Greylock, Aspect Ventures/Acrew Capital, Singtel Innov8 and Shlomo Kramer (who is the co-founder and CEO of the company). The company reports it has now raised $332 million since inception.
Kramer is a serial entrepreneur. He co-founded Check Point Software, which went public in 1996 and Imperva, which went public in 2011, and was later acquired by private equity firm Thoma Bravo in 2018. He helped launch Cato in 2015. “In 2015, we identified that the wide area networks (WANs), which is a tens of billions of dollars market, was still built on the same technology stack […] that connects physical locations, and appliances that protect physical locations and was primarily sold by the telcos and MSPs for many years,” Kramer explained.
The idea with Cato was to take that technology and redesign it for a mobile and cloud world, not one that was built for the previous generation of software that lived in private data centers and was mostly accessed from an office. Today they have a cloud-based network of 60 Points of Presence (PoPs) around the world, giving customers access to networking resources and network security no matter where they happen to be
The bet they made was a good one because the world has changed, and that became even more pronounced this year when COVID hit and forced many people to work from home. Now suddenly having the ability to sign in from anywhere became more important than ever, and they have been doing well with 2x growth in ARR this year (although he wouldn’t share specific revenue numbers).
As a company getting Series E funding, Kramer doesn’t shy away from the idea of eventually going public, especially since he’s done it twice before, but neither is he ready to commit any time table. For now, he says the company is growing rapidly, with almost 700 customers — and that’s why it decided to take such a large capital influx right now.
Cato currently has 270 employees with plans to grow to 400 by the end of next year. He says that Cato is a global company with headquarters in Israel where diversity involves religion, but he is trying to build a diverse and inclusive culture regardless of the location.
“My feeling is that inclusion needs to happen in the earlier stages of the funnel. I’m personally involved in these efforts, at the educational sector level, and when students are ready to be recruited by startups, we are already competitive, and if you look at our employee base it’s very diverse,” Kramer said.
With the new funds, he plans to keep building the company and the product. “There’s a huge opportunity and we want to move as fast as possible. We are also going to make very big investments on the engineering side to take the solution and go to the next level,” he said.