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Zscaler raises $25mn from Google Capital to close $110-mn round

September 24
11:31 PM 2015

Zscaler, a California-based cloud security firm, has mobilized $25million from Google Capital, an equity investment arm of Google. Adding to the oversubscribed round, the total amount raised by Zscaler reaches $110mn. The cyber security firm raised $85million in August. Zscaler was waiting for a strategic partner to close the round. Google Capital is engaged in late-stage financing activity.

Zscaler offers security for cloud applications to over its subscribers and customers running more than 5,000 in number. The majority of Zscaler's subscribers use Google's cloud applications and services making an intersection between Google's customers and Zscaler's subscribers.

After the latest round of $25mn, the total funding reached to $148mn four times more than company's financing level in just two months. Zscaler's CEO Jay Chaudhry says this is the last financing round before going for an initial public offer (IPO). Zscaler has recently hired a Chief Financial Officer (CFO) to fulfill all the regulatory norms and conditions.

Zscaler declined to announce exact day of IPO but said it's in the process of meeting all the criterion from the finance point of view and regulatory point of view.

Zscaler's solutions help its customers defend against hackers. It raised $100mn in a round led by PE firm TPG including EMC, Lightspeed Ventures. 

Recently another security firm Crowdstrike mobilized $100mn in a round led by Google Capital. Illumio raised $100mn in a round by BlackRock in April. Zscaler aims to expand beyond the 5,000 subscribers in 185 nations. its list of customers includes UK's National Health Service, NBC and United Airlines. Zscalers ensures its customers that nothing bad comes in. 

The encouraging potential in the cyber security sector is attracting more investments of late. Many private equity funds, investments arms of global majors are exploring ways to park their funds in the cyber security segment. 

Security software maker AVG's former executives and investors have floated a $125-mn investment fund for cyber security segment. The organizers of the fund are considering several investment proposals in the cyber security sector.

After the latest round of financing, Zscaler's valuation is estimated to be $1billion, but the company denied to provide an exact figure on the valuation after the latest the round of financing. 

Global cyber security investments surpassed $2.3 billion mark this year so far according to data from CB Insights and Bain Capital Ventures. The total investments in global cyber security were $2.5bn in 2014 and $1.7bn in 2013. Zscaler offers one platform for cyber security and this prevents customers from buying different boxes in a combination.

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