- On Tuesday, cybersecurity startup Snyk announced it raised $150 million in funding in a round led by Stripes, just four months after it announced a $70 million round in September.
- Snyk is now valued at over $1 billion and has landed big customers like Google, Salesforce, Intuit, and Nordstrom.
- Snyk CEO Peter McKay says the startup has been able to grow quickly because of its focus on building up its developer community, which now numbers over 400,000 people, and developers increasingly have a large influence on what technology products their companies buy.
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Less than five years after it launched, cybersecurity company Snyk (which is pronounced “sneak” and stands for “so now you know”) is valued at over $1 billion.
Today, many companies’ applications are underpinned by open source software, or software that is free for anyone to use, download, and modify. Snyk builds tools that automatically scans the open source software to find and fix vulnerabilities.
On Tuesday, Snyk announced it raised $150 million in a round led by Stripes, just four months after it announced it closed a $70 million round in September. In total, Snyk has raised $250 million.
Snyk wasn’t looking to raise money. The raise was prompted by VCs who wanted to invest proactively, says Snyk CEO Peter McKay.
Since the last round, McKay says that Snyk’s annual recurring revenue has doubled. And from 2018 to 2019, its ARR has quadrupled as it won big customers like Google, Salesforce, Intuit, and Nordstrom.
“Our investors see that as a huge opportunity,” McKay told Business Insider. “They see our momentum both in the community and customer traction and just the awareness on Snyk in the market.”
Snyk’s goal is to grow from 400,000 developers to millions
McKay says Snyk has been able to double its ARR in the last four months because it works from the bottom up, by creating a community of developers who bring its software in-house to help them perform their jobs.
While Snyk helps make open source software more secure, its tools are not themselves free and open source, although the company’s got a try-it-before-you buy it freemium tier. The interesting thing about Snyk is that it breaks the misconception that developers — who are comfortable with free open-source software, or just whipping together a tool themselves — aren’t willing to pay for software tools. (That’s one of the reasons Snyk was named by VCs as one of the 72 startups that will boom in 2020.)
“A lot of that has been driven from an aggressive shift, and more power, shifting to developers, not just in tech companies but all companies,” McKay said. “The speed of your developing organization and the number of apps that you’re building for your customers have increased significantly yet cybersecurity continues to be a big issue for all of them.”
In fact, Snyk is doubling down on its plans to grow its community of users. It has a team that focuses on building its community and sharing information about security with them and McKay says the company hopes its education efforts will reach every developer worldwide.
Last June, Snyk acquired DevSecCon, a conference focused on development and security. Snyk says that this conference will become a big vehicle for it to build an even bigger developer community around its products and educate them about security.
Still, McKay says Snyk treats its business and community as two separate companies, as what’s right for the business can be different from what’s right for the community. On the community side, Snyk focuses on raising more awareness on security, compliance, and data protection, as well as providing developers access to the freemium version of its software.
For enterprise customers, Snyk focuses on building business features to help large teams collaborate better.
“As more and more of these companies move aggressively to digital first and become more and more of a software company, the importance of software and the increase in software risk is becoming significant,” McKay said. “The only way to solve that problem in a way that doesn’t slow you down, you’ve got to build it in the development lifecycle.”
‘It’s growing at a controlled pace’
McKay says a big part of why VCs invested in his company was because it’s been fiscally responsible and spends money prudently. He says Snyk still has most of the money from the last round in the bank.
“We spend it the right way, the right time, all the right metrics we’re focused on,” McKay said. “We don’t want to lose the quality of the teams we hire, and don’t want to lose maniacal focus on customer success. It’s growing at a controlled pace.”
Although McKay says Snyk didn’t need to raise new funding, it saw this round as an opportunity to reach even larger goals. With the funding, Snyk plans to focus on building its products, expanding globally, and continuing to grow its community of over 400,000 developers.
“When you look at it, we thought this would be a way to expand our product roadmap faster,” McKay said. “This would be a way to expand our community globally. This would be a way for us to expand our go-to-market at a faster pace then we were. The time is now and the market opportunity is there.”
Now that Snyk’s valuation has reached over a billion, McKay says its goal is to run its business like a public company.
“An acquisition could come out of anywhere, you never say never, but we don’t plan on that. We focus on being a long term successful software company where you get to a point where you have the option of being public,” McKay said.
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