Cloud security company Sonrai Security has closed a US$20 million (C$26.4 million) venture capital round led by Menlo Ventures of Silicon Valley, the largest fully disclosed VC deal in Atlantic Canada this year.
The round also drew the backing of returning investors Polaris Partners and Ten Eleven Ventures.
Based in New York and Fredericton, Sonrai burst on the scene in late 2018 when its first public announcement ever was that it had closed a US$18.5 million funding round. (The New Brunswick Innovation Foundation invested in the first round but not in the second.) Now Sonrai has raised more than C$50 million and will use the new capital to accelerate R&D, marketing and sales for its flagship product, Sonrai Dig.
The solution helps corporations move their data on to the cloud by tying together identity and search solutions so they can organize and protect their cloud-based data. As well as offering comprehensive data security, Sonrai enhances the quality of an organization’s compliance.
“The shift to the cloud is inevitable. And with that shift, cloud identity and data governance become primary concerns,” said Menlo Ventures Partner Venky Ganesan in a statement. “As enterprises move first to one cloud, and later to multiple clouds, the problems around access/privilege management, configuration drift, and sensitive data loss become increasingly complex. Drawing on a proven team with strong domain expertise, Sonrai built an incredible solution that wins over sophisticated cloud and security buyers. We’ve bet on this team before and are proud to back them a second time.”
The Series B raise by Sonrai is welcome news for the Atlantic Canadian startup community, as the pandemic has reduced the number and size of VC deals in the region this year. The only funding round that may be in the same ballpark as Sonrai's is CarbonCure Technologies' investment from such bluechip investors as Amazon and Breakthrough Energy Ventures. The value of that deal wasn't released, but the quality of investors suggests it was a whopper.
The Canadian Venture Capital and Private Equity Association said that Atlantic Canadian startups raised 19 VC rounds worth $41 million in the first six months of 2020, compared with 26 deals worth $64 million in the first half of 2019.
Sonrai has its origins in Q1 Labs, a cybersecurity company that sold out to IBM for a reported US$600 million eight years ago. Sonrai CEO Brendan Hannigan and CTO Sandy Bird held similar roles with the previous company, and their experience with IBM after the Q1 sale gave them invaluable insights into corporate cybersecurity.
They found that global enterprises generate hundreds of cloud accounts and thousands of data stores, many of which are improperly configured, creating an ever-growing data risk.
Sonrai Dig automatically uncovers and eliminates identity, data and cloud platform risks and continuously monitors the system to ensure new risks and unusual activity are quickly identified. It builds a comprehensive graph detailing every relationship between identities (people and non-people) and data that exist within cloud platforms. Sonrai said a growing number of clients, including Fortune 100 companies and major banks, are using the product.
Sonrai currently employs about 45 to 47 people, and the Atlantic Canadian-based development team, mainly in Fredericton, represent roughly 60 percent of the staff, said company spokesman Manny Ataebi in an interview. He added that the company expects to double or triple its staffing in the next few years, though the exact growth rate will depend on revenue growth.
New York-based Ataebi said the Fredericton team will grow “probably by the same multiples, and we will continue to invest in research and development up there. We have a tremendous engineering team that creates products faster than any company I’ve ever been part of.”
The company first launched its product early in 2019 and continued to develop it. About three months ago, it launched its "governance and automation" functionality, which automatically organizes and monitors the cloud-based data.
“The increasing frequency of cloud breaches caused by identity and data access complexity has driven significant traction for our Sonrai Dig platform among large enterprises, who see it as the basis of their cloud security model,” said Hannigan in the statement. “We are extremely pleased to partner with Menlo Ventures, whose long experience in this space will help us rapidly accelerate our expansion.”
Editor's note: this is an updated version of our earlier story on Sonrai's funding.