Duo Security Inc. has joined the billion-dollar startup club at a time when venture capitalists are investing record amounts into the cybersecurity sector.
Hacks and cyberattacks have dominated the news cycle in recent months, from the Equifax breach to the 2016 presidential election. As businesses struggle to secure their IT systems and increase their cybersecurity budgets, venture capitalists see a greater market opportunity in the sector, which has drawn heavy investment for years.
Duo Security closed a $70 million Series D round at a valuation of $1.17 billion led by Meritech Capital Partners and Lead Edge Capital. Participating investors included Geodesic Capital and Index Ventures, which will assist Duo with plans for greater international expansion.
The company has now raised $119 million to date. Existing investors include Redpoint Ventures and True Ventures. Workday joined as a strategic investor.
The funding comes as venture capitalists poured 1.4 billion into cybersecurity in the first half of 2017, according to data tracker VentureSource. That’s up 62% from the first half of 2016.
That record level of investment has largely been driven by large, late-stage deals. Cybereason, Illumio and CrowdStrike all raised funding rounds of $100 million or more at billion-dollar valuations earlier this year.
Duo Chief Executive Dug Song said the Ann Arbor, Mich.,-based company has a different perspective on funding events than Silicon Valley-based companies. He said the company has fewer distractions and is more focused on its customers.
“We’re a little removed from the traditional Valley hype cycle,” he said.
In recent years, cyber attackers have become more sophisticated and have tried to infiltrate companies by exploiting users through techniques like phishing. Duo Security aims to verify the identity of users and evaluate the status of their devices before allowing them to log on to company applications.
Lead Edge Capital partner Brian Neider said his firm first invested in the company’s Series C. It has since been one of the best operational performers in his portfolio.
He said unlike other security products that are only used by a small number of IT professionals, Duo is touched by almost every employee in the enterprise as they access applications like email daily.
“That makes it incredibly sticky,” he said.