Sequoia to Lead $75 Million Round for Cloud Software Startup Okta
Okta, the cloud software startup that helps companies manage login identities across multiple services, plans to announce later this week that it has secured a new round of funding led by Sequoia Capital.
Sources familiar with the deal didn’t give precise figures, but tell Re/code that Sequoia’s Growth fund will lead the investment of
about $70 million $75 million* at a pre-money valuation approaching $600 million. Pat Grady, a Sequoia partner, will join Okta’s board as its fifth member. The round will also include at least one new investor, though its identity couldn’t be learned. Allen & Co., the investment bank that has in recent years come to specialize in advising tech companies, advised Okta. The deal is expected to be announced on Wednesday. (See Update below.)
As numerous companies have embraced multiple types of cloud services to run their businesses, more than 1,000 have chosen Okta, based in San Francisco, to manage what’s often called the “identity layer” — user names, passwords and other credentials used to access various services like Salesforce.com, Workday and Marketo. Okta provides a single sign-on capability that makes it easy to grant and remove access to the many Web services that a company might use. Its customers include Chiquita Brands, LinkedIn, MGM Resorts, Western Union and software giant SAP.
In an interview in September, Okta CEO Todd McKinnon predicted the company would hit break-even within 24 months. Assuming it’s still on track, that would now be 14 months away. In April, Okta named Krista Anderson, previously a senior vice president at Salesforce.com, as its chief customer officer.
It’s a competitive business. Last month Santa Clara, Calif.-based Centrify, another player in the identity management space, announced that it had secured a $42 million Series E from Samsung Ventures, Fortinet and Docomo Capital. Another player, Ping Identity, raised $44 million in a Series F led by W Capital Partners and DFJ Growth last July, and has been working its way toward an IPO.
Update: Okta has taken the wraps off its news, as other outlets are now confirming Re/code’s initial report. The exact amount of the funding round is $75 million and the new investors are mutual fund firm Janus Capital Group and Altimeter Capital.
McKinnon, Okta’s CEO has been talking about his IPO hopes for some time, and is reiterating them in comments today. He also discussed the tricky timing of his attempts to raise money in April just as the valuations of publicly held cloud companies had been falling.