Internet of Things (IoT) security company ForeScout Technologies Inc. raised about $116 million for its initial public offering (IPO) last week, pricing 5.3 million shares at $22, the top of its proposed range. While shares spiked almost 16% in first-day trading, the IPO marks the third Bay Area-backed company to go public in 2017 with a market cap below its last private valuation.
The San Jose, Calif.-based company helps over 2,500 global enterprise and government customers monitor billions of devices connected to organizations’ networks and alerts them of potential intrusions. The firm offers security solutions for all internet-connected devices, such as smart TVs and voice assistants. ForeScout suggests that the traditional approach of relying on a corporate-installed software agent to secure a device has significant limitations in today’s world, instead offering its “agentless approach to network security.”
The tech firm said it generated $167 million in revenue last year, up from $126 million in 2015. Losses grew to $75 million in 2016, up from $27 million in 2015. ForeScout CEO Michael DeCesare indicates that the firm is “on a path towards profitability” as it heads off against rivals such as legacy tech titans Cisco Systems Inc. and HP Enterprise. DeCesare indicates that the “competitive differentiation” of ForeScout’s products is “very strong,” as the firm employs its agentless approach to cybersecurity.
“With the billions of IoT connected devices being added to the IT networks, ForeScout provides unparalleled visibility to see where security is needed,” said Theresia Gouw, co-founder of Aspect Ventures, an investor in ForeScout.
Before the IPO, Amadeus Capital had a significant stake in the company at 19.6%, followed by Accel with 15.2%, Pitango at 14% and Meritech Capital Partners at 13.4%. Since 2000, ForeScout had raised at least $125 million in funding and was reportedly valued at $1 billion in 2016. The IPO valued ForeScout at just above $800 million, with shares jumping to $25.92 by Nov. 1st and reflected in a near $950 million market cap.
Investors have confidence not only in ForeScout’s products, but its management team comprised of industry vets. Prior to ForeScout, DeCesare served as President of Intel Security and executive VP of worldwide sales at McAfee. Vice Chairman Save DeWalt was previously Chairman and CEO of FireEye.