It’s almost an accepted inevitability that the Internet of Things will one day rule the world — or, at the very least, retail. With such promise behind it, it’s almost shocking to think that more IoT startups haven’t broken through the $1 billion valuation ceiling.
Silicon Valley’s ForeScout Technologies is the latest to join that elusive group, as the company announced Thursday (Jan. 21) that it had secured an additional $76 million in a late-stage funding round led by Wellington Management Company. With a new source of financing, $125 million in revenue in FY2015 and a 50 percent compound annual growth rate since 2012, ForeScout Technologies is officially valued at over $1 billion.
While many have taken this as an indication of ForeScout’s inherent strength, CEO Michael DeCesare claimed instead that the valuation is a vote of confidence in the soon-to-erupt IoT market, as well as almost every retailer’s need to secure their devices from data theft.
“It took 25 years for the world to get to 5 billion connected devices, but with the explosion of the IoT, we’ll see around 30 billion by 2020 — an entirely new approach to security is required,” DeCesare said in a statement. “Device proliferation and IoT deployments are easy entrances for cybercriminals if not detected and protected. With agentless visibility, intuitive automated controls and a commitment to integrating with leading security and IT management solutions, ForeScout is well-positioned to own the burgeoning IoT security market.”
After investors across the board made a concerted effort to pull back on unicorn valuations for unproven startups, the ForeScout annoucement proves that some companies, in certain markets, are just too appealing for investors to pass up. The Wall Street Journal explained that only two other cybersecurity companies have achieved $1 billion valuations. CloudFlare, a denial-of-service attack prevention specialist, and Tanium, which produces a tool that governments can use to track data breaches, both count nine zeros in their valuation columns.
Now, the challenge for ForeScout and other unicorns is proving that they’re worth it.