San Jose, California-based Zscaler, a provider of cloud-based security solutions, today announced that it has secured a massive $38 million round of funding—money that the company wasn’t desperate to raise.
The company, which utilizes a global network of more than 100 data centers to filter network traffic and protect end users and company networks from security threats, has enjoyed rapid success and growth so far.
Until now, the company has been funded mainly from founder and CEO Jay Chaudhry, a serial entrepreneur in the IT security space who has achieved significant success in the past.
Chaudhry founded CipherTrust, an email security firm that was acquired by Secure Computing in a cash and stock deal valued at approximately $274 million in 2006. Secure Computing was ultimately acquired by McAfee. Chaudhry also founded AirDefense, a wireless IDS/IPS vendor that was acquired by Motorola in 2008. Additionally, Chaudhry was the founder of CoreHarbor, an ASP for e-procurement solutions, which was ultimately acquired by USi/AT&T. Back in 1996, Chaudhry started SecureIT, an Internet security services company that was bought out by VeriSign.
Based on current growth and metrics from the company, Mr. Chaudhry seems to be on track for another success story.
Zscaler says it currently protects over 8 million users in 160 countries, at the more than 2,500 enterprises that use its Secure Cloud Gateway, which they say processes more than 5 billion transactions each day.
The company’s cloud–based model lets IT departments manage user traffic on any device, anywhere in the world, without the need for any hardware or software.
The $38 million cash injection came from “strategic investors”, including Lightspeed Ventures, a successful VC firm.
The company said it plans to put the new cash to use to further accelerate its go-to-market strategy with expanded sales and marketing, and further develop its cloud security offering with an emphasis on mobility.
Within business world, it’s sometimes good advice to take the money when you don’t need it. That advice can be taken when setting up a bank loan or line of credit, or in the Venture Capital space. For bank loans, companies that are in dire need of cash may have a hard time getting a loan, or be given fairly high interest rates. For a company with healthy books that wants to setup a line of credit for future use, the best time for that is when they don’t need it.
The same goes for venture capital. Those companies not needing outside investment are likely to get much more attractive terms and valuations.
"To date, we have resisted outside investment despite inquiries from top-tier investors. Our new strategic partners share our vision and are committed to helping Zscaler build a long-lasting business,” Chaudhry said.