Increased demand created by COVID was critical in the company’s decision to take $200 million of existing funding. The money will support foreign expansion, new product development, and more channel field resources.
Security operations provider Arctic Wolf, fresh off a new funding round designed to take advantage of present market conditions, is primed for expansion. The company believes its offerings are truly differentiated from the general SOC market, and having transitioned to a 100% channel model, is looking to expand its channel business significantly
In business since 2015 providing security operations services, Arctic Wolf has two primary products – MDR and managed risk – and backs up its partners in a way it thinks goes well beyond the standard support model.
“One of our core differentiators is a concierge service delivery model,” said Nick Schneider, Arctic Wolf’s Chief Revenue Officer. “MSSPs get a named resource and we know the customer inside and out. It’s not a support model because we don’t think that works. In cybersecurity when you have an issue, understanding the environment you play in is just as critical as understanding the issue. To be effective, not only do you have to work with issues, but you work with the customer and get them better prepared. We view our concierge security team as an extension of the IT teams we work with. In a support model, it’s hard to get a consistent message or react in a timely manner.”
Arctic Wolf started initially selling direct to end users, then moved into a hybrid model, with VAR partners at first. They have since added a strong managed services partner component, and are also transitioning to a 100% channel model.
“About four and a half years ago, we were still direct,” Schneider said. “Then when I came we launched our channel program. Initially it worked through a resale model. We were working with a lot of local regional VARs and some national VARs and over time, we added some additional capabilities which really related to MSPs. This included one model where service delivery through them was direct with AWS, another in conjunction with MSPs and one where we provide a bundle of services powered by Arctic Wolf. Those three channels today involve over 500 partners, primarily in North America.”
That channel remains a blend of MSSPs, MSPs and VARs.
“We have a good mix of all three, and the manner how they leverage us in their portfolio varies,” Schneider indicated.
About a year and a half ago, Arctic Wolf began the process of transitioning to a 100% channel model which will see all new sales go through partners.
“As we acquire new customers, we do that solely through partners,” Schneider said. “We have some direct customers from before that, and have worked to try and transition them. We will continue that process as it works for both partners and customers.”
Last week’s new funding round, $200 million in Series E funding was led by Viking Global Investors, with additional participation from DTCP and existing investors. With it, and assisted by it, Arctic Wolf’s head office departs California, moving to Eden Prairie, Minnesota, one of Minneapolis’ nicer suburbs. Schneider said the move has several strategic advantages for the company.
“We have built a home in Eden Prairie over the past four years,” he noted. “I was the first employee there, but we have expanded the employee base. Initially, it was primarily sales and marketing, but we now have 200 people in the Eden Prairie office.”
Schneider said that the move makes the company’s head office more central to partners and customers, and to their other offices.
“It also brings us into a more favorable business environment, and it gives us access to talent in the current market,” he said. “You’d be surprised what’s available around tech here. There’s a strong lineage of high technology companies in the area – we call it the Silicon Prairie up here. It will be particularly good for getting sales and marketing people from other tech companies.”
Schneider said that the cash infusion is directly tied to being able to take advantages of new opportunities created by COVID.
“We’ve seen increased demand for our product and services because of this,” he indicated. “Folks are looking for ways to secure their workforce, in a riskier environment. Customers expect more of their vendors We’ve seen more interest and that resonates with other vendors in a similar space as us. So COVID is clearly related to the timing of our raise, to ensure we can accelerate our growth plans.”
Schneider indicated some other planned uses for the cash.
“We will look to expand internationally,” he said. “We are looking to move to EMEA and APJ and Latin America over next 12-18 months. We also plan to develop additional products and services.
“We will certainly go deeper with the partners we have now,” Schneider added. “Additional funding will give us additional resources in the field. We will be able to support partners more and add new ones where it makes sense.”