Company will use money to expand presence in a market expected to grow 116% a year
Cato Networks, a player in the fast-growing secure access service edge (SASE) market that’s drawing new companies and established security vendors, got a $130 million boost in its latest funding round.
The Lowdown: The company, based in Tel Aviv, Israel, said Tuesday it will use the money to accelerate its technology development strategy to expand its reach in the market.
The Details: The infusion of money brings the total amount that Cato has raised since its founding in 2015 to $332 million. The latest round was led by Lightspeed Venture Partners and included existing investors Greylock, Aspect Ventures/Acrew Capital, Singtel Innov8, and Shlomo Kramer, the company’s co-founder and CEO.
Also included in the round was investment fund manager Coatue.
SASE brings together software-defined WAN (SD-WAN), secure web gateways, and firewalls to offer a cloud-based integration of network connectivity and security. As more applications and data are accessed and stored outside of core data centers, the need to ensure secure connectivity grows.
Cato offers its own Cato Cloud, which converges such functions as cloud and WAN optimization with a self-healing architecture and security features like next-generation firewalls, advanced threat prevention, and cloud and mobile security.
The cloud platform also reaches into the public cloud providers like Amazon Web Services and Google Cloud to mobile devices, SD-WAN environments, the data center, and cloud-based applications like Microsoft 365, Salesforce, SAP, and RingCentral. It has a global backbone of more than 50 points of presence (PoPs) that are connected through multiple network providers.
The Impact: The SASE market is expected to grow rapidly as the IT world becomes more distributed, a trend that has accelerated during the global COVID-19 pandemic. Dell’Oro Group analysts expect the space to expand an average of 116% a year through 2024, with Dell’Oro Research Director Mauricio Sanchez saying that “SASE holds great appeal because it unifies and simplifies networking and security across a wide variety of network use cases, ranging from larger headquarter/branch networks down to individual users.”
According to Gartner, by 2024, at least 40% of enterprises will have strategies to adopt SASE. That’s up from less than 1% at the end of 2018.
Background: Cato for more than a year has been working with channel partners to expand its business. In November 2019, the company revamped its channel program to help VARs, service providers, and systems integrators more quickly grow revenue and margins. In July, the company tapped Anthony D’Angelo, a former executive with Cisco and Viptela, to run its global channel sales business and extended its partner program to include technical support services.
The Buzz: “SASE is the hottest area in IT, and this funding round further attests to Cato’s leadership of the SASE market,” Kramer said. “Only the Cato Cloud was built from the ground up as a converged and cloud-based global SASE service.”
“SASE will transform the multibillion-dollar markets for enterprise networking and security, and we believe Cato will lead this transformation. Cato’s architecture is purposely built to enable IT to support current and future business requirements such as the need to dynamically support secure and optimized work from anywhere,” said Yoni Cheifetz, a partner at Lightspeed Venture Partners.