RedShield co-founder, chief executive and major shareholder Andy Prow. Photo / Mark Mitchell
RedShield co-founder, chief executive and major shareholder Andy Prow. Photo / Mark Mitchell
Wellington-based cybersecurity company RedShield has raised $14 million at a $64m post-money valuation, co-founder and chief executive Andy Prow says.
The round was led by a new investor, Pencarrow, and an existing shareholder, Sage Technologies.
Sage (not to be confused with the UK accounting software company of the same name)is a vehicle for European private equity investor Harald McPike.
Pencarrow bills itself as NZ's oldest private equity firm and has invested more than $500m in mid-sized New Zealand businesses since it was founded in 1993. Its greatest hits include Icebreaker, sold to The North Face last year for $288m.
Its backers include high net worth individuals, iwi, community trusts - and, more recently, the NZ Super Fund, which has chipped in $30m.
The 10-year-old RedShield makes what it calls "shielding" software to protect an organisation from a wide array of online threats.
Prow says it provides a service for companies facing complex threats - which means most of its customers are large organisations such as healthcare providers, energy companies and government agencies.
RedShield "isn't applicable to SMEs", the CEO says. Smaller organisations' usually more simple security needs are well catered to by a raft of cheap or free products.
Still, even at the top end of town there are a lot of security players. What's RedShield's point of difference? Prow says customising; its service is tailored for every customer, in contrast to what he calls "the generic giants".
RedShield founder Andy Prow says it was a "strategic choice" to take capital from a local private equity player
Business has been strong in Australia and the NZ, with RedShield now on all-of-government supplier panels on both sides of the Tasman.
It has also pushed into the UK and the US. The Series B money is to push further into overseas markets - its local hunting grounds only supporting so many large organisations. "That's where the ultra-high-value deals are," Prow says.
He says the nature of the industry means that customers don't like to be named, but that they include "one of the UK's largest corporates."
Current staff stand at 35. Prow says the new capital will be used to add sales and customer support roles overseas, while engineering and R&D remains in Auckland and Wellington.
Prow says it was a "strategic choice" to take capital from a local private equity player.
"I fully believe in the value of maintaining significant New Zealand ownership as we grow. New Zealand has a proven history fostering innovators who repeatedly excel on the global scale. New Zealand cyber-security services are truly world-class, encompassing research, consulting and penetration-testing services, and we're helping to lead the charge in our growing SaaS [software-a-service] and security platforms space. I firmly believe that New Zealand's innovation and trustworthiness are highly valued on the global scene."
Pencarrow managing partner Nigel Bingham says, "Cybersecurity is a massive and growing global issue. RedShield has consistently demonstrated that its offering is unique globally and provides significant value to its clients.
"As active and supportive investors, we will be partnering with Andy and the senior management to help execute the company's vision and strategic direction as it rolls and out scales its offering globally."
RedShield earlier raised $6.2m in a Series A round in 2016. Prow says there are two (un-named) players who are likely to join the Series B round, taking it above $14m.
There was no seed round before that.
"We were able to bootstrap with money from our profitable consultancy business," Prow says (Aura Information Security, sold to Kordia in 2015).
He says RedShield had two substantial paying customers from the get-go - one a large NZ corporate, the other a large NZ government agency - and was breakeven by the time of its Series A round.
Prow says its still breakeven today as it chases growth. He won't comment in detail on financials but says "the next stage of our journey will be from $10m ARR [annual revenue rate] to $100m."
An IPO is a possibility for the next capital push, but Series C and D rounds are also on the table. With the Series B round over-subscribed, there is no pressing need to go public.
