ForeScout Lands $76M In New Funding, Hits Unicorn Status As It Invests In Beating Cisco

There's a new "unicorn" startup on the block: On Thursday, ForeScout Technologies revealed that it had raised $76 million in a late-state funding round that valued the Campbell, Calif.-based security vendor at more than $1 billion.

"We like joining the unicorn club," CEO Michael DeCesare said in an interview with CRN. "From my side, it's nice to see the investors seeing the progress that we're seeing in the business."

The funding round was led by Wellington Management Co. LLP and adds to the $80 million the company had raised to date.

[Related: ForeScout Channel Chief Jumps To Risk Management Vendor Prevalent]

ForeScout has been on an incredible growth trajectory in recent years, averaging 50 percent year-over-year growth annually and exceeding that in 2015, with 77 percent revenue growth, to $125 million, according to the company.

The company's technology looks to capitalize on the exploding Internet of Things market, providing an agent-less visibility and enforcement security solution for all connected devices.

DeCesare said the funding will be put toward three categories of investment.

The first, he said, is more sales ammo to beat its largest competitor -- Cisco -- in the field. While the company already does "incredibly well" against the San Jose, Calif., networking giant, DeCesare said he plans to drive sales-capacity investments that will help knock the vendor out of opportunities where it is already well-entrenched with the rest of its portfolio.

"We are putting together a really strong roster of individuals on the sales side," DeCesare said.

That sales investment includes the hiring of sales executives, channel account managers, presales expertise and more, he said. DeCesare said ForeScout will also be investing in updating its sales compensation plans in the coming months to drive more sales through the channel.

Second, DeCesare said, ForeScout will use the funding to invest in R&D and third-party integrations to keep pace with the exploding IoT market, which it works to secure with its CounterAct platform.

Finally, he said, ForeScout will be investing in building out a technical support organization, run by former VCE executive Jason Pishotti, who serves as senior vice president of customer support and consulting.

"Those are the three buckets we will be investing in," DeCesare said. "It's all about fueling the company for growth. … I think the growth trajectory is only going up."

DeCesare said this round of funding will likely be the company's last, as it fulfills its operating capital needs. However, he said, an IPO isn't off the table in the coming months, when the time is right.

"I'm ready for the IPO," DeCesare said. "We certainly have the scale and growth and vertical market penetration to be a public company, but we aren't dependent on an IPO."

Russell Zientek, vice president of security at Centennial, Colo.-based Arrow Electronics, said in an email that the funding "solidifies ForeScout's place in the market and establishes them as a leader."

"The funding and $1 billion valuation is a testament to ForeScout's technology, and really proves to validate that the company is continuing to lead its market as it becomes a large and well-funded partner," Zientek said.

Zientek said he would like to see ForeScout continue to innovate and to invest in its channel partners, particularly around its programs and partner enablement. Those investments will help set ForeScout apart from other "unicorns" in the market, he said.

"When you look at other unicorns in the space, it's mostly tech startups with heavy amounts of financing that lack true profitability," Zientek said. "ForeScout has a proven technology with real customers and real channel partners having great success with their deployments. They are tried and tested in a way that other unicorns are not."

PUBLISHED JAN. 21, 2016