Opswat Raises $125M To Scale Channel En Route To IPO

‘I’m trying to build something that lasts, something much bigger here. In order to do that, we came to the realization that bringing in a financial partner was the right thing to do,’ says Opswat CEO Benny Czarny.

Critical infrastructure protection vendor Opswat closed its first-ever funding round to add more channel partners, double down on demand generation, and pursue strategic acquisitions.

The Tampa, Fla.-based cybersecurity company said its solution provider push is intended to expand the share of business flowing through the channel from 50 percent today to 75 percent three years from now, said founder and CEO Benny Czarny. Opswat hopes to strengthen its channel, strengthen its internal reporting and compliance, and make a couple acquisitions before carrying out an IPO, he said.

“I’m trying to build something that lasts, something much bigger here,” Czarny told CRN. “In order to do that, we came to the realization that bringing in a financial partner was the right thing to do.”

[Related: Opswat Buys Security Vendor Impulse To Defend Critical Infrastructure]

The $125 million investment from Brighton Park Capital is the first outside funding Opswat has taken since its founding in 2002. Opswat made the decision to bring in a financial partner more than three years ago, and Czarny said the company spoke with 22 potential investors to determine who had the right operational experience and team members to guide Opswat to an initial public offering (IPO).

The company grew year-over-year revenue by 40 percent in 2020, and is on pace to double year-over-year sales in the first quarter of 2021, according to Czarny. Opswat expects to continue and hopefully exceed that momentum with the infusion of cash from Brighton Park.

Opswat plans to use the proceeds to hire more channel marketing specialists and invest in activities like market development funds (MDF) to help generate new business more quickly, according to Czarny. The company hopes to run joint webinars and marketing programs with its channel partners, Czarny said, and begin hosting in-person roundtables with solution providers once the COVID-19 pandemic subsides.

Most Opswat clients are open to working with one of the company’s 88 channel partners except for some critical infrastructure government agencies both domestically and abroad, Czarny said. Partners with a focus on critical infrastructure, professional services capabilities, and a tight relationship with Salesforce are particularly appealing to Opswat, Czarny said.

From a product standpoint, Czarny said Opswat plans to use the proceeds to support additional file formats around its Deep Content Disarm and Reconstruction (Deep CDR) technology. Using a team of 15 engineers, Czarny said Opswat’s CDR product can currently regenerate files, PDFs, word documents, videos and images across 110 out of a possible 5,000 known file formats.

With the funding from Brighton Park, Czarny said Opswat plans to add support for more file formats. Opswat will additionally examine acquisition targets in the critical infrastructure protection space that can be easily integrated with the company’s platform. The company most recently bought Network Access Control (NAC) and Software Defined Perimeter (SDP) provider Impulse in December 2019.

“It’s not only that we want to lead the space now,” Czarny said. “We want to lead the space three years from now.”

As far as metrics are concerned, Czarny said Opswat is focused on revenue growth, increasing its contribution from channel partners, and increasing marketing qualified leads and sales meetings through demand generation activities. When it comes to training, Czarny said the company will track the number of team members, channel partners and customers certified through the Opswat Academy.

And from a customer standpoint, Czarny said Opswat will monitor the Net Promoter score (NPS) for its products as well as the speed and thoroughness of its response to customer inquiries. “We are very focused on growing critical infrastructure for channel partners,” he said.