Exclusive: Cybersecurity firm Huntress raises a $60 million Series C after doubling revenue in 2021 and 2022

·5 min read
Courtesy of Huntress and Sapphire Ventures

Morning, Term Sheeters. This is Luisa Beltran, subbing for the Term Sheet team. The rise in cyberattacks is bad news for business—but it has been good news for Huntress, a company that helps small- and medium-sized businesses protect themselves against cyberattacks, and just raised its biggest round ever.

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Fortune has learned that Huntress’ Series C round came in at $60 million and was led by Sapphire Ventures. Also participating were Forgepoint Capital and JMI Equity who re-upped. Casber Wang, a Sapphire partner, is joining Huntress’s board. Huntress has collected $118 million in total.

“It used to be small and midsized businesses were too small for anyone to care about,” said Kyle Hanslovan, CEO and cofounder of Huntress. “Cybercriminals got better at automating. Now they’re going after smaller targets.” Nearly 43% of cyberattacks are focused on SMBs, according to an Accenture cybercrime study from 2019. More than half, or 61%, of midsized businesses—those companies with 250 to 2000 employees—do not have dedicated cybersecurity experts in their organization, according to a survey conducted in January on Huntress's behalf from Virtual Intelligence Briefing.

Hanslovan said he knows of “tons of cofounders and friends” who were not able to raise in this environment, but he attributes the speedy finish to some notable wins for Huntress. The company doubled its annual revenue in 2021 and 2022, while customers have nearly quadrupled to about 100,000. Huntress is “purposely not profitable,” but it does have efficient growth, Hanslovan said.

Huntress’ customers include Tech Keys, 1Path, and Logically. Competitors, which include CrowdStrike Holdings and SentinelOne, typically cater to bigger companies. Huntress software is more affordable and requires fewer people to manage its products compared to its rivals, said Hanslovan. “Some of their products are really good but they require a small army to manage them. Our Huntress product is fully managed; you can use junior IT instead of senior people to use it,” he said.

Huntress, which employs nearly 300 people, plans to use the funding for R&D and to go after "larger mid-market businesses,” Hanslovan said. The company also plans to hire. The downturn has caused layoffs, meaning previously sought-after talent might be available. “It used to be really hard to find top talent. But with all the layoffs, now there’s better access to certain talent especially in the technical space,” he said.

Fundraising for Huntress was also quicker this time around. The company finished the Series C in about 60 days, Hanslovan said. This is different from prior rounds. Huntress needed about four to six months to complete each of its last rounds, including a $40 million Series B in 2021 and an $18 million Series A in 2020, he said. (Huntress also collected $40 million in debt financing from CIBC Innovation in September.)

Huntress’s speedy fundraise occurred during a depressed market for VC fundraising. Startups around the globe raised a collective $58.6 billion in venture funding in the first quarter—dropping 13% from the last quarter and at their lowest levels since pre-pandemic, Fortune reported, citing data from CB Insights. Huntress did not disclose a valuation.

Wang, the partner at Sapphire, said the bar has been raised for companies seeking capital right now. “Huntress was able to raise at a healthy valuation...but it’s really a testament to the great business Kyle built at Huntress. You have to have a great business to raise money right now,” Wang said. Sapphire’s investment in Huntress came from its sixth fund, a $1.75 billion pool that the VC began deploying in 2022. About 70% of Sapphire VI is available, Wang said.

Having Sapphire as an investor should prove useful for Huntress, which plans to go public sometime in the future. Sapphire has invested in some big IPOs, including the offerings of Box, DocuSign, and Square; it has the late-stage, high-growth experience that Huntress is seeking, he said. “Huntress is on that trajectory. We want the option to go public. We call that public readiness. You never really know what is going to happen but it’s something that we’re preparing for,” Hanslovan said.

Eye of the Tiger

In other news, Tiger Global has hired an advisor to help it offload “hundreds of millions of dollars worth of private companies” on the secondary market, according to reports from Bloomberg and the Financial Times. The technology-focused hedge fund is looking to tap the secondary market to help it return cash to some of its investors, the FT said. Tiger owns stakes in companies such as payments business Stripe, U.S. software group Databricks, and China’s ByteDance. The fund’s decision comes as the IPO market remains closed. When it was thriving, new issues provided an exit route for investors of fast-growing companies. But with IPOs on hold, the secondary market has emerged as a tool to help return cash to investors. Tiger Global declined to comment.

See you tomorrow,

Luisa Beltran
Twitter: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

This story was originally featured on Fortune.com

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