Email Security Startup Valimail Raises $45M To Battle Proofpoint, Agari

Valimail said it plans to use the Series C funding to dramatically expand its engineering, field sales, and go-to-market teams as well as get into verticals beyond financial services, healthcare and government.

Valimail has completed its Series C funding round to grow headcount, expand internationally and continue winning customers from the likes of Proofpoint and Agari.

The San Francisco-based email security startup plans to use the $45 million of proceeds to dramatically expand its engineering, field sales, and go-to-market teams as well as get into verticals beyond financial services, healthcare and government, said Co-Founder and CEO Alexander Garcia-Tobar. Increased market awareness should strengthen Valimail's hand when selling against Proofpoint or Agari, he said.

"No one knows we exist, and people don't understand how our product is different," Garcia-Tobar told CRN. "[But] we're the only company in our space that guarantees that we get our clients into a state of enforcement."

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If Valimail is able to make it to the proof of concept phase, Garcia-Tobar said the company is able to beat competitors like Agari and Proofpoint more than 85 percent of the time since clients and prospects are able to see what the company is attempting to do and how it's different. The anti-phishing company has maintained a 100 percent renewal rate since its founding four years ago, Garcia-Tobar said.

Garcia-Tobar said that Agari and Proofpoint – which got into the space through its August 2016 acquisition of Return Path's email fraud protection business – are hampered by having developed their technology more than a decade ago. As a result, Garcia-Tobar said these companies rely more on manual processes and aren't able to deliver the same level of success as Valimail.

"We're just a more modern, automated version of what exists out there," Garcia-Tobar said. "It's just pure and simple better technology."

At the time of Valimail's founding, existing email fraud protection offerings were successful just 20 percent to 40 percent of the time, according to Garcia-Tobar. But Valimail's fully-automated offering is able to get 90 percent of clients into enforcement in only four months, with the remainder achieving enforcement within a year, Garcia-Tobar said.

Full automation also makes it possible for Valimail to get clients into enforcement using just a tenth of the staffing required by other offerings, Garcia-Tobar said. He said 40 percent of Valimail's customers use Proofpoint for their security email gateway (SEG) offering but turn to Valimail's identity-based anti-phishing protection even though Proofpoint has a competing offering.

"We provide a contractual guarantee [around enforcement] because we see our products works better than anything else out there," Garcia-Tobar said. "It's a next-generation product."

Proofpoint didn't immediately responded to requests for comment. Agari, meanwhile, said that it manages nearly 135,000 domains – compared to the just 6,000 managed by Valimail – at a high rate of effectiveness based on an objective view across virtually all visible domains on the internet.

"Industry-leading companies and other trust Agari," Agari CMO Armen Najarian said in a statement. "The Agari founder and current CEO [Patrick Peterson] is the co-author of DMARC standard, demonstrating that Agari has extensive email security domain experience and knowledge."

Najarian said the Agari secure email cloud is uniquely positioned to protect companies from new and different attack types stemming from the migration of email and messaging to the cloud. Agari provides customers with the flexibility of an on-premises deployment option, and the company's automated, hosted tool has been adopted by many Fortune 1000 companies, according to Najarian.

"Our primary competitor based on our product portfolio breadth and the deep customer problems we solve is Proofpoint – not Valimail," Najarian said in a statement.

As far as Valimail's staff is concerned, Garcia-Tobar said he plans to expand the company's headcount from 100 employees today to 200 employees a year from now through engineering, field sales, and go-to-market hires. Valimail has tripled its top-line revenue on a year-over-year basis for its first four years of existence, he said, and hopes to keep doubling or tripling annual sales for the foreseeable future.

As for geographic reach, Garcia-Tobar would like to grow the company's business outside North America from 20 percent of total revenue today to 40 percent of total sales in the future. The Series C round was led by Insight Partners, and brings the company's total funding to $84 million since being founded in 2015.

Garcia-Tobar anticipated that Valimail will have a particularly easy time gaining traction in Europe due to regulations such as GDPR mandating greater protection around personally identifiable information (PII) and against impersonation efforts. Valimail can address requirements in the U.K. and elsewhere to protect against spoofing and account takeover-based attacks without the use of PII, Garcia-Tobar said.

Valimail to date has been most focused on finance, healthcare and government since these industries are highly-regulated and tend to be more security-conscious, Garcia-Tobar said. But as email-based criminal activity spreads to new sectors such as real estate and manufacturing, Garcia-Tobar said companies in new markets at having board-level discussions around resources for email protection.

"I want to grow as quickly as possible," Garcia-Tobar said.

FedResults has used Valimail's technology to engage with six executive-level U.S. government agencies and get them to enforcement around email security since becoming a partner in early 2018, according to Director of Sales Brian Snell. Specifically, Snell said Valimail's ability to get the U.S. Department of Homeland Security (DHS) to enforcement within weeks helped FedResults meet an important deadline.

"They're easy to work with and they've got a strong government team," Snell said. "We've got very tight integration to those guys."

Going forward, Snell would like to see Valimail use the $45 million of Series C funding to further educate government contractors on the threat posed by phishing-based attacks and the ease of use of Valimail's offering. Specifically, Snell said that further training programs for channel partners around Valimail would in turn make it easier for the channel to educate and train the U.S. government ecosystem.

"The relationship has been very strong," Snell said. "Our customers are happy, and they've been sticking with the product."