Investor group pledges $1.3 billion to data-security platform Lacework

A group led by investment firms that include Tiger Global Management, Sutter Hill Ventures, D1 Capital Partners and Altimeter Capital are backing a $1.3 billion financing round for the company, bringing the total amount of capital it has raised this year to more than $1.8 billion.

The financing follows a period of rapid growth for Lacework, which uses data from a customer’s cloud computing infrastructure to better understand user behavior and detect vulnerabilities.

“Let’s say there’s a compromise in a piece of software that’s being run in a customer’s cloud infrastructure, and that compromise then results in a crypto-mining exposure or vulnerability," said Jay Parikh, co-chief executive of Lacework. “We will understand that that’s an anomaly…and we can alert at the highest level for that."

Lacework has more than tripled its third-quarter 2021 revenue over the same period last year, and early this year raised a $525 million funding round led by many of the same investors that led its most recent funding.

“All the folks that invested in the January round kind of doubled down in this round," Co-CEO David Hatfield said. “Our insiders all wanted to have a bigger stake in the company."

The newest financing also attracted investors that hadn’t previously backed the company, including asset management firms Franklin Templeton and Morgan Stanley Investment Management, and private investment firms General Catalyst, Durable Capital Partners and XN.

Lacework plans to use the fresh capital to expand its workforce of roughly 1,000 employees and pursue acquisitions, similar to its recently announced purchase of cloud-computing infrastructure management provider Soluble.

Lacework is among a growing number of data security startups attracting large amounts of investor capital at lofty valuations, as a shift to remote work models has underscored the importance of online security in the face of increasingly sophisticated cyberattacks.

Cybersecurity startups garnered $9.92 billion in venture funding in 2021 as of June 15, nearly matching the total amount of venture funding raised by such companies in all of 2020 and more than doubling the $4.73 billion raised in 2016, according to a report from data provider PitchBook Data Inc.

Other security software startups that raised sizable financing rounds at valuations north of $1 billion this year include Snyk Ltd., Acronis and Transmit Security.