In another sign of investors’ eagerness to buy into the surging interest in zero-trust security, Illumio Inc. said it raised $225 million in a new late-stage round that carries a $2.75 billion “unicorn” valuation.

The Series F round was led by Thoma Bravo LLC with participation by Franklin Templeton Financial Services Corp. and Owl Rock Capital Advisors LLC, bringing the total funding it has raised to $557 million.

The company’s “adaptive segmentation” technology maps application dependencies within a company’s computing fabric and recommends ways to lock down critical components into secured segments that can’t be easily penetrated from elsewhere in the network. The company claims hundreds of enterprise customers including the three biggest top software-as-a-service companies, five large insurers and six of the world’s ten biggest banks.

Zero-trust security has taken the market by storm, particularly since remote work arrangements driven by the COVID-19 pandemic obliterated perimeter protections. Zero-trust principles presume that breaches are inevitable. Rather than keeping bad actors off the network, the focus is on locking down applications, data stores and other resources with access granted only to verified users and processes.

There is no such thing as a zero-trust product. Rather, the strategy involves stitching together elements such as identity and access management, cloud access security brokers, network segmentation, directories and encryption to manage access across the full range of on-premises and cloud infrastructure.

Zero trust has benefited from the Biden administration’s recent executive order aimed at strengthening cybersecurity in the U. S. government. “The White House has been imploring people to segment their networks,” said Illumio Chief Executive Andrew Rubin. “Segmentation is a core pillar of zero trust. You cannot have zero trust without segmentation.”

Crumbling perimeter

Illumio says traditional perimeter-based tools can protect only about 20% percent of corporate data, noting that the more than $150 billion that Gartner Inc. expects to be spent on security and risk management this year failed to stop recent major attacks on meat processing company JBS SA, Colonial Pipeline Co., Microsoft Corp. Exchange servers and users of SolarWinds Worldwide LLC’s Orion software.

Perimeter defenses have proven even less relevant as the pandemic dispersed data into employee homes over the past year. Segmenting networks permits individual segments to be assigned their own security policies.

“When you turn the software on, it uses a tremendous amount of automation to detect core services, things that run pervasively through the estate, baselines them and suggests policy so you can decide what controls to implement,” Rubin said. The software can be installed on-premises or run as a service across a combination of clouds in data centers at any scale, the company said.

Thoma Bravo is a private equity firm that owns nearly 90 companies mostly in the technology sphere. The company has historically not made equity investments, but was eager to get in on the zero-trust trend, Rubins said. “We are one of the few investments they’ve made in this genre and I think we’re going to get a lot of expertise from them,” he said. The firm will get a seat on Illumio’s board, but details have not been determined.

Rubin said Illumio’s immediate plans are to use the funding to drive field sales expansion, channel presence and marketing. He said the company is also considering “product expansion, extension and places we haven’t previously been.” He declined to elaborate.

Illumio isn’t profitable but is focused on building market share and growing its headcount by 25%, to more than 500 people, by the end of this year. 

Photo: Freerange Stock