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StackRox Raises $26.5M For Expansion and R&D

StackRox recently announced their completion of a $26.5M Series C round led by Menlo Ventures. StackRox, a cloud-based platform, offers threat detection and security for Kubernetes systems. StackRox announced they intend to expand into key geographic areas and continue their research and development efforts. Started in 2014, the company chose to focus on Kubernetes rather than other solutions in the space; now Kubernetes is estimated to be run in nearly 80% of organizations.  

Why this transaction?

The York IE team chose this as our transaction of the week to once again talk about the transition to cloud computing. As more industries continue investing heavily in their workflows we see an upward trend in DevOp spending. In a previous TOW, we talked about how microservices are making large solutions, on platforms like Kubernetes, more digestible and scalable. Now, we see how companies like StackRox are addressing the growing need for a security solution to protect these Kubernetes applications. StackRox also announced that the COVID pandemic has been another catalyst for growth, recording 240% revenue growth this year, as companies started accelerating their digital transformation in response to the changing environment.    

COVID Accelerating Digital Transformation

A less obvious change occurred during the COVID pandemic that probably was not noticed by many consumers. The pandemic renewed the urgency that many organizations needed to adopt cloud-native applications and the shift to a “work from home” culture stressed the importance of security around those applications. To showcase this acceleration the York IE team compiled data for funding related to Kubernetes companies:

As you can see from the graph above, funding for Kubernetes has seen consistent investment since it’s peak year in 2015. What is even more interesting is the fact that we are only ¾ of the way done with 2020 and are on pace to pass 2015 as the most funded year. Once again, this acceleration in funding can be directly linked to the pandemic as more companies rush to digitization in order to keep up with the rest of the market.

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