The latest funding brings its total to $332.5 million and follows an even bigger $125 million Series D investment in June 2017. And — perhaps more importantly — it confirms that segmentation is a thing, says CEO and founder Andrew Rubin.
“The amount, to me, was never the interesting part,” Rubin said. The significance of the Series E is two-fold, he added. First, Morgan Stanley is an Illumio customer, and clients advised by J.P. Morgan Asset Management led both the Series D and Series E rounds.
“And second, it is continued validation that segmentation, or microsegmentation, is real,” Rubin said. “If you start a company that builds a firewall, there’s no debate about whether the firewall category is real. It’s been so for two decades. But when we started Illumio, the reality is segmentation didn’t even exist in cybersecurity.”
Microsegmentation enables fine-grained security policies to be assigned to cloud and data center applications. The approach improves network security by integrating it directly into a virtualized workload without requiring a hardware-based firewall. It reduces a company’s attack surface by essentially sealing off workloads from the rest of the network, thus preventing hackers from gaining access to the wider system.
And while security wasn’t a well-known use case for the technology when Illumio launched in late 2014, microsegmentation has since become an essential tool in an organization’s security arsenal.
VMware Gets Credit
Rubin says he gives Illumio competitor VMware “quite a bit of credit” for legitimizing microsegmentation. The virtualization giant’s NSX networking technology, which it acquired from SDN startup Nicira for $1.26 billion in 2012, uses microsegmentation. VMware quickly saw security become a top use case and large driver of NSX sales.
“VMware’s acquisition of Nicira was the beginning of recognition that segmentation was not just an infrastructure conversation but a security conversation,” Rubin said. “I do give VMware and NSX certainly some of the credit for bringing microsegmentation to the forefront of the conversation — and I would like to think we participated in the conversation. [Illumio customers] Salesforce and Morgan Stanley are certainly a testament that we are trying to be part of that conversation.”
Workday, BNP Paribas, Oracle NetSuite, and Quicken Loans are also customers.
Rubin won’t disclose Illumio’s exact valuation. What he will say, however, is that it’s a “very significant uptick from the Series D round two years ago.” At that time, the company’s reported value was a little above $1 billion. And while Rubin wouldn’t confirm that $1 billion figure, he says it was “directionally correct,” and this latest round is a “very significant uptick.”
In addition to the Series E, Illumio appointed Singh as its CFO. He previously served as the CFO at companies including Anaplan, Nimble Storage, Clearwell Systems, and Asurion.
Rubin says he didn’t bring on Singh to take the company public, or in anticipation of future investment rounds. “If you want to build a world-class company you have to have somebody like Anup who is a world-class CFO,” he said.
Singh said working at Illumio “checked all the boxes. We have a platform that is leading in the market, it’s highly differentiated from the competition, we have a world-class team of investors and board of directors. I looked at the market opportunity and said this is enormous. The need for [what] we solve for customers is just huge.”
Both top execs say an initial public offering may happen but, in Singh’s words: “it is a milestone along the journey but certainly not the destination.”
They are also not committal on future late-stage funding. “We think the market opportunity is enormous,” Rubin said. “We think we have an opportunity to build a category-leading company in segmentation. If it requires raising more money to do so,” then Illumio will do it.
But in the meantime, the company will use the Series E to expand its global reach and invest in its security platform. “One of the things we have heavily invested in is the ability to do segmentation at scale,” Rubin said.
Last month the company announced full availability of its PCE Supercluster technology, which it says makes it the first to offer a microsegmentation and visibility that scales well beyond 100,000 workloads.