Cato Networks secured $200 million in fresh funding to help it further develop and scale its cloud-based secure access service edge (SASE) platform, raising its total financing to more than half a billion dollars.
The company said in a press release the latest funding round was its largest to date. It was led by private equity firm Lightspeed Venture Partners with contributions from previous investors Greylock, Aspect Ventures/Acrew Capital, Coatue, Singtel Innov8 and Cato Networks cofounder and CEO Shlomo Kramer.
Last year, Cato raised $207 million across two funding rounds in April ($77 million) and November ($130 million), building on earlier rounds which raised $70 million in 2015 and $55 million in 2019. Inclusive of the latest chunk of change, the company has snagged a total of $532 million in backing for its platform and is now valued at $2.5 billion. Yishay Yovel, Cato Networks’ CMO, told Fierce while it still has plenty of money remaining from its recent funding rounds, the new batch of cash will allow it to accelerate growth and “do more in a shorter amount of time.”
“Time is a factor,” he explained. “SASE is maturing quickly, the opportunity is getting realized more quickly and we need to scale up more quickly in response.” Specifically, he said, the money will be dedicated to two main efforts: engineering to continue development of its platform and boosting its sales capabilities.
Yovel noted that unlike some other SASE vendors which offer a point solution, Cato’s offering is cloud-based, allowing security features to be delivered to users anywhere rather than just those working at a branch location. Essentially, he said, Cato delivers networking and security capabilities the way a company like Amazon Web Services delivers other applications.
With the new funding, Cato is aiming to speed the launch of even more cloud capabilities for its SASE platform. The next feature on deck is a cloud access security broker, with the funding enabling Cato to add resources to accelerate delivery of that function, he noted.
At the same time, Yovel said it’s important for Cato to ramp engagement with the market to capture key sales opportunities as they arise. “SASE is very hot,” he said. “More and more customers – not early adopters, [but] mainstream buyers – when they think about their next MPLS renewal, if they think about hardware refresh and cloud migrations, typically these are going to make a very strategic change to their network and we want to be there and propose the Cato value proposition.”
That’s not to say Cato’s not already finding success. Yovel said the company has maintained a similar growth rate this year as in 2020 and is adding approximately 100 to 150 customers each quarter. It has connected more than 15,000 branch locations and more than 300,000 mobile users. That’s about a six-fold increase from pre-Covid numbers, he noted.
With momentum behind SASE growing, Yovel said the company has noticed a shift in how operators view vendors like Cato.
“The telcos were very protective of the MPLS business, which in many cases we replace,” he explained. Now that they’ve realized the trend toward SASE is “probably unstoppable,” they want to partner. “We give them the cloud angle, so it’s more scalable, more elastic, more global…So we see a shift. We see more interest from telcos where in the past we were more competitive to them,” Yovel concluded.