Kiteworks Raises $456 Million, Reaches Unicorn Status in Cybersecurity

Kiteworks, a cybersecurity company specializing in securing email communications, file sharing, and handling sensitive data, has recently raised $456 million in a significant funding round. This investment, led by Insight Partners and Sixth Street Growth, values the company at over $1 billion, marking a new chapter in its growth.

The San Mateo-based company, formerly known as Accellion, is notable for overcoming a major data breach in 2021 that impacted over 300 organizations, including Morgan Stanley, the University of California, Kroger, and Shell. That breach, linked to legacy services, was a significant challenge for the company. However, since rebranding as Kiteworks, the company has turned things around and has been profitable for the past two years, now serving 100 million end users and over 3,650 global enterprises and government agencies.

This funding round arrives at a time when cybersecurity threats continue to be a significant concern for organizations worldwide, despite a challenging funding environment for startups. Successful cybersecurity companies, like Kiteworks, are increasingly positioned as consolidators in the industry. Earlier this year, Wiz raised $1 billion to acquire smaller companies, and Kiteworks appears to have similar ambitions.

Kiteworks plans to use this new capital to pursue an aggressive acquisition strategy, which began about two years ago. “This will help fund the continuation of that strategy into the next four years,” said Tim Freestone, Kiteworks’ chief strategy officer. Since 2022, the company has acquired four smaller enterprise startups. Additionally, the funds will be used for hiring, research and development, and business development efforts.

The cybersecurity sector has seen a rapid proliferation of startups due to the constantly evolving nature of cyber threats. However, Kiteworks represents a more mature side of the industry, having operated privately for over 20 years. While much of the recent focus in cybersecurity has been on cloud, network, and application security, Kiteworks has remained focused on securing sensitive data, regardless of where it resides—on-premises, in the cloud, or elsewhere.

“We’re finally at the data layer as an industry, and so that’s helped us,” Freestone noted, emphasizing the company’s focus on data security.

Kiteworks’ unique approach includes the concept of a private content network (PCN), designed to handle sensitive data securely. This focus on compliance and security has made Kiteworks particularly appealing to government organizations and companies needing to meet stringent data protection requirements. Notably, Kiteworks is the only security platform authorized by FedRAMP in the U.S. that supports secure file sharing, transfer, and email communications in line with compliance requirements.

One of Kiteworks’ innovative solutions includes a digital rights management (DRM) tool that ensures sensitive documents remain within the sender’s firewall by providing recipients with a facsimile rather than the actual document.

“This investment reinforces Kiteworks’ role in tackling the challenge of managing sensitive data,” said Jonathan Yaron, CEO and chairman of Kiteworks. “We’re eager to accelerate our growth and continue innovating to meet our customers’ evolving needs.”

The investment from Insight Partners and Sixth Street Growth includes a mix of primary and secondary shares. While the company hasn’t disclosed the exact proportions, PitchBook data from early July indicates that the first tranche, designated as growth capital, amounted to $228 million.

Insight Partners, which has invested over $4.5 billion in cybersecurity companies, sees this as the right moment for Kiteworks to expand. “With the rise in third-party cybersecurity threats and stringent regulatory requirements, Kiteworks has a large market opportunity in front of them for both organic and inorganic growth,” said Eoin Duane, managing director of Insight. “Customers love the Kiteworks PCN—there’s strong growth within the existing customer base, and as data security continues to become more important, the company is well-positioned to attract new customers.”

Kiteworks is set to leverage this substantial investment to not only grow its business but also to play a pivotal role in shaping the future of data security in an increasingly complex digital landscape.