KnowBe4 IPO Could Come Late 2020, Value Firm At Over US$2B: Report


The IPO could value security awareness training vendor KnowBe4 at more than double the $1 billion valuation the company received just 15 months ago at the time of KKR’s $300 million investment.

By Michael Novinson

Security awareness training vendor KnowBe4 has engaged investment banks to help with preparations for a US initial public offering (IPO), according to Reuters.

KnowBe4’s IPO could come later this year or early in 2021, and value the Clearwater, Fla.-based simulated phishing platform provider at more than US$2 billion, people familiar with the matter told Reuters. That more than double the US$1 billion valuation KnowBe4 notched just 15 months ago at the time of private equity giant KKR’s US$300 million investment in the company.

Sources cautioned Reuters that the listing plans are subject to market conditions. KnowBe4 and KKR declined to comment to CRN.

KnowBe4 was founded in 2010, employs 945 people, and has raised US$393.5 million in five rounds of outside funding, according to LinkedIn and Crunchbase. The June 2019 US$300 million investment from KKR came just three months after KnowBe4 raised $50 million in a Series C round also led by KKR.

The company grew year-over-year sales by 25 percent in its most recent quarter, and has a customer base of more than 33,000 organizations across the finance, healthcare, energy, government and insurance sectors. KnowBe4 was No. 422 on the 2020 Inc. 5000 list, which tracks the fastest-growing private companies in America, with 1,083 per cent revenue growth from 2017 to 2020.

KnowBe4 has made six acquisitions over the past three years, according to Crunchbase, with the company scooping up UK-based employee security training vendor Twist and Shout Group in September 2019, Norwegian security culture specialist CLTRe in May 2019 and Brazilian security awareness training and phishing simulation provider El Pescador in February 2019.

The IPO pursuit comes after four of KnowBe4’s competitors were acquired, with endpoint security vendor Webroot buying the assets of Securecast in August 2017, Proofpoint purchasing Wombat Security Technologies for US$225 million in February 2018, Mimecast buying startup Ataata in July 2018, and Kaseya purchasing startup ID Agent in May 2019.

IPO activity in the cybersecurity space has slowed significantly since the onset of the COVID-19 pandemic, with data analytics vendor Sumo Logic being the only security vendor to pursue an IPO since the start of 2020. The Redwood City, Calif.-based SaaS machine data analytics firm filed a registration statement last month, and is looking to raise up to US$357.4 million in a Nasdaq public offering.

In contrast, 2019 was extremely active in the cybersecurity IPO space, with Cloudflare, CrowdStrike, Ping Identity and Tufin raising more than US$1.43 billion combined from their respective public offerings. But there hadn’t been a single cybersecurity IPO between September 2019 and Sumo Logic’s filing, with coronavirus dulling the public market’s appetite for making big bets on emerging technologies.

Lead KnowBe4 investor KKR has continued to be very active in the security space, giving US$300 million last month to cybersecurity managed service provider ReliaQuest to accelerate development of the firm’s GreyMatter intelligence platform. ReliaQuest said the proceeds will also fund international expansion and strategic hiring, with the company planning to bring on 100 more employees by the end of 2020.

Outside of KnowBe4 and ReliaQuest, KKR purchased Optiv, No. 26 on the 2020 CRN Solution Provider 500, for US$1.9 billion in February 2017. KKR has in recent years also participated in funding rounds for endpoint security vendor Cylance and identity security vendor ForgeRock.

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