GDPR, and the
newer California Consumer Privacy Act, have given a legal bite to
ongoing developments in online privacy and data protection: it’s always
good practice for companies with an online presence to take measures to
safeguard people’s data, but now failing to do so can land them in some
serious
hot water.
Now
— to underscore the urgency and demand in the market — one of the
bigger companies helping organizations navigate those rules is
announcing a huge round of funding.
OneTrust,
which builds tools to help companies navigate data protection and
privacy policies both internally and with its customers, has raised $200
million in a Series A led by Insight that values the company at $1.3
billion.
It’s an outsized round for a Series A, being made at an
equally outsized valuation — especially considering that the company is
only three years old — but that’s because of the wide-ranging nature of
the issue, according to CEO Kabir Barday, and
OneTrust’s early moves and subsequent pole position in tackling it.
“We’re
talking about an operational overhaul in a company’s practices,” Barday
said in an interview. “That requires the right technology and reach to
be able to deliver that at a low cost.” Notably, he said that OneTrust
wasn’t actually in search of funding — it’s already generating revenue
and could have grown off its own balance sheet — although he noted that
having the capitalization and backing sends a signal to the market and
in particular to larger organizations of its stability and staying
power.
Currently, OneTrust has around 3,000 customers across 100
countries (and 1,000 employees), and the plan will be to continue to
expand its reach geographically and to more businesses. Funding will
also go toward the company’s technology: it already has 50 patents filed
and another 50 applications in progress, securing its own IP in the
area of privacy protection.
OneTrust offers technology and services covering three different aspects of data protection and privacy management.
Its
Privacy Management Software helps an organization manage how it
collects data, and it generates compliance reports in line with how a
site is working relative to different jurisdictions. Then there is the
famous (or infamous) service that lets internet users set their
preferences for how they want their data to be handled on different
sites. The third is a larger database and risk management platform that
assesses how various third-party services (for example advertising
providers) work on a site and where they might pose data protection
risks.
These are all provided either as a cloud-based software as a
service, or an on-premises solution, depending on the customer in
question.
The startup also has an interesting backstory that sheds
some light on how it was founded and how it identified the gap in the
market relatively early.
Alan Dabbiere, who is the co-chairman of OneTrust, had been the chairman of Airwatch — the mobile device management company
acquired by VMware in 2014
(Airwatch’s CEO and founder, John Marshall, is OneTrust’s other
co-chairman). In an interview, he told me that it was when they were at
Airwatch — where Barday had worked across consulting, integration,
engineering and product management — that they began to see just how a
smartphone “could be a quagmire of privacy issues.”
“We could
capture apps that an employee was using so that we could show them to IT
to mitigate security risks,” he said, “but that actually presented a
big privacy issue. If [the employee] has dyslexia [and uses a special
app for it] or if the employee used a dating app, you’ve now shown
things to IT that you shouldn’t have.”
He admitted that in the
first version of the software, “we weren’t even thinking about whether
that was inappropriate, but then we quickly realised that we needed to
be thinking about privacy.”
Dabbiere said that it was Barday who
first brought that sensibility to light, and “that is something that we
have evolved from.” After that, and after the VMware sale, it seemed a
no-brainer that he and Marshall would come on to help the new startup
grow.
Airwatch made a relatively quick exit, I pointed out. His
response: the plan is to stay the course at OneTrust, with a lot more
room for expansion in this market. He describes the issues of data
protection and privacy as “death by 1,000 cuts.” I guess when you think
about it from an enterprising point of view, that essentially presents
1,000 business opportunities.
Indeed, there is obvious growth
potential to expand not just its funnel of customers, but to add more
services, such as proactive detection of malware that might leak
customers’ data (which calls to mind the
recently fined breach at British Airways), as well as tools to help stop that once identified.
While
there are a million other companies also looking to fix those problems
today, what’s interesting is the point from which OneTrust is starting:
by providing tools to organizations simply to help them operate in the
current regulatory climate as good citizens of the online world.
This is what caught Insight’s eye with this investment.
“OneTrust
has truly established themselves as leaders in this space in a very
short time frame, and are quickly becoming for privacy professionals
what Salesforce became for salespeople,” said Richard Wells of Insight.
“They offer such a vast range of modules and tools to help customers
keep their businesses compliant with varying regulatory laws, and the
tailwinds around GDPR and the upcoming CCPA make this an opportune time
for growth. Their leadership team is unparalleled in their ambition and
has proven their ability to convert those ambitions into reality.”
Wells
added that while this is a big round for a Series A it’s because it is
something of an outlier — not a mark of how Series A rounds will go
soon.
“Investors will always be interested in and keen to partner
with companies that are providing real solutions, are already
established and are led by a strong group of entrepreneurs,” he said in
an interview. “This is a company that has the expertise to help solve
for what could be one of the greatest challenges of the next decade.
That’s the company investors want to partner with and grow, regardless
of fund timing.”
Source. TechCrunch, Ingrid Lunden, July 11, 2019
***
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