Channel-focused Mailprotector gets cash infusion to fund growth

MailProtector has seen a recent spurt of growth following a doubling down on its commitment to the channel, which has led to securing capital to enhance sales, marketing and R&D capabilities.

David Setzer, Mailprotector’s CEO

SaaS email security vendor Mailprotector has announced the completion of a mezzanine debt round through Lighter Capital. The new funding is to drive significant expansion, and will bring in new sales and marketing resources, enhance R&D spending, and more than double the company’s headcount. The announcement was made at the CompTIA Annual Member meeting in Chicago.

MailProtector has been in business since 2000, and has been laser-focused on email security since 2003. Their focus is on smaller companies, with between 20 and 100 seats, although they do have some larger clients. They have always sold through channel partners, but with the appointment of Ted Roller as channel chief, they doubled down on this commitment, ceasing sales through other channels and investing more in enhancing partner profitability. That enhanced channel focus has increased both MailProtector’s business and its opportunities – which is where the new funding comes in.

MailProtector has steadfastly avoided venture funding in the past, because of the impact on the company’s development and long-term survival, and is emphatic that this cash infusion is very different from venture capital money.

“This is debt funding,” said David Setzer, Mailprotector’s CEO. “It still leaves us in complete control of our decisions. Our core strategy stays aligned with who we are, and does not impact our complete ability to make our own decisions.”

Mezzanine funding is not convertible debt, and the loan is effectively secured because like a bank, they can take the business if it fails.

“Unlike banks though, which don’t tend to understand SaaS or the MRR model, Lighter Capital gets this business model,” Setzer said. “They took the debt on us because of our long and established track record and our strong recent growth rate, which translate into a very low chance of us going under.”

The funding will allow MailProtector to take advantage of its increased visibility in the channel, and its new growth opportunities.

“Ted helped develop this strategy and we executed on it,” Setzer said. “We have seen a substantial increase in our growth rate as a result. We will be investing in a lot of headcount, more than doubling the size of the company. This means more sales and marketing people to provide resources for partners. It will also allow us to execute on our vision from the R&D side, giving us more resources, which will make us able to roll out some unique products.”

This vision was previewed last year, when MailProtector retired the encryption technology it had been using, which like most solutions on the market, kept both the email and the encryption management in the cloud. Their new solution leaves the storage keys in the cloud, while storing the encrypted data on the customers’ sites, improving security.

“We are all about email from a channel perspective and that isn’t going to change,” Roller said. “But there are so many opportunities in the channel to create differentiated value – in compliance, in encryption, in archiving. Our products innovate in a place where everyone else just takes cash. We want to be the top of the spear that MSPs are the most proud of, even in a white label relationship.”

Roller said that with the new funding, MailProtector will be able able to execute on more iterative change, especially in the compliance space in the way they drive value.

“We want to make email a more secure place to play for everybody,” he said.

While the funding may result in recruiting new partners, that’s not the focus.

“All of our investment is targeted first at helping existing partners grow,” Roller said. “However, it does spur the same value proposition that helps bring new partners in. It’s amazing how word of mouth drives our business. Partners tell their friends – in non competitive geos – about us. While I have said that we were the best-kept secret in the channel, we aren’t as much of a secret as we used to be.”