Vanta goes from low-profile startup to $ 500 million valuation with $ 50 million Sequoia Series A
Christina Cacioppo says she enjoyed the looks on investors’ faces when she opened the books on her software startup, Vanta.
In 2018, Cacioppo brought Vanta through Y Combinator and raised $ 3 million in seed investment. Then she went dark, fueling her business, which provides security and compliance software to businesses, through her initial sales. The company has reached 600 clients without an appropriate website; Today, he claims to have helped 1,000 people with their SOC 2 compliance audits, surpassing $ 10 million in annual recurring revenue while reaching 65 employees.
“People always think we’re in a random corner, which is great,” Cacioppo recalls. “Let them think about it, as we get taller than anyone thought.”
However, every startup ultimately goes beyond the act of build-in-quiet. For Vanta, that means sharing the news that the company has raised an oversized $ 50 million Series A financing round led by Sequoia. All parties declined to comment on the assessment. But the investment values Vanta at around $ 500 million, according to knowledgeable source Forbes.
Vanta’s approach: Apply continuous monitoring from other software companies, such as Datadog or PagerDuty, to what until now has been an annual or semi-annual audit rush. While an auditor still needs to go through a client’s books, they can do so with Vanta’s reports, which keep a business honest about its security and data compliance throughout the year. This means fewer surprises, inside and outside a business.
The need for such a product came to Cacioppo at Dropbox, where she worked from 2014 to 2016 as a senior product manager on Dropbox Paper, this company’s attempt to compete with collaborative document tools like Google Docs and Quip. , which are now part of Salesforce. After stints in venture capital at Union Square Ventures and as an entrepreneur working on multiple projects, including a video messaging app perhaps ahead of his time, Cacioppo had joined Dropbox for an experience at a large tech company. .
But by rolling out Paper to Dropbox customers, she and her team had drawn the wrath of the company’s legal department, which decided it would make Dropbox non-compliant in its contracts. “It was frustrating because we were trying to find a product suitable for the market. , but you can’t just give Paper to anyone who pays for Dropbox, ”Cacioppo says.
After spending 2017 studying the market, Cacioppo and co-founder Erik Goldman, who are no longer with the startup, participated in YC. The business took off among other businesses to go through the startup accelerator, eventually reaching Affinity, Lattice, Loom, and Clubhouse (the working software).
One of Vanta’s first clients was Notion, the working software startup that reached a valuation of $ 2 billion in April 2020. There, COO Akshay Kothari says the company is on the cusp of receive its SOC 2 certification with the help of Vanta after several years of using its monitoring tools. “A lot of companies, even us, are a little scared” of what has been considered a “thorny” certification process, says Kothari. Vanta, however, serves as a feature forcing companies to become more mature about their data security, he says. “Now I wish we had done it sooner.
With HIPAA healthcare compliance and ISO / IEC 27001 certifications now supported and more to come, Cacioppo finally decided to hire its first marketing employee last fall, a belated decision she calls it a “badge of honor, which is also quite embarrassing”. To raise the round, she reached out to five investors she had had a close relationship with and asked them to remain silent to avoid a full-fledged auction.
Andrew Reed of Sequoia was one of them; he says he was impressed by the number of Sequoia companies, nearly two dozen, that were using Vanta successfully. “Vanta helps its customers grow their business faster, and when products do, people tend to talk about it,” says Reed. Offering as references some of the entrepreneurs he has invested with, Cacioppo called them – and the rest. Their rave reviews and Sequoia’s track record of supporting high-ambition founders were victorious.
With the funding, Vanta plans to continue hiring, including opening an office in New York, while investing in products, more certifications and marketing. “We’ve been at one on our PR and marketing dial, and now it’s becoming more and more obvious that that will benefit us, so let’s turn that dial to a 10,” Cacioppo says. “I want to build a great Internet company that defines the category that redefines the way we think about security and trust in the Internet and services.”
His advice to other entrepreneurs looking to take a similar slow then sudden approach: focus less on VC play. And when you meet companies, put them to work by asking them for introductions to their portfolios – a win-win solution that allows both parties to grow their businesses while also clarifying themselves.
“I really liked the risk, I still really enjoy indoor baseball, all the machinations,” she said. “But if you confuse success in financing with success in starting a business, you will only get one of those things.”