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Versa raises $120M for its software-defined networking and security stack

Networking and cybersecurity firm Versa today announced that it raised $120 million in a mix of equity and debt led by BlackRock, with participation from Silicon Valley Bank. CEO Kelly Ahuja tells TechCrunch that the proceeds, which bring Versa's total capital raised to $316 million, will be put toward go-to-market efforts and scaling the company. He demurred when asked what percentage of the financing was equity versus debt.

Versa's large round suggests that, despite the market downturn, VCs haven't lost faith in cybersecurity vendors yet. According to data from PitchBook, venture capital investments have reached about $13.66 billion so far this year, up from $11.47 billion compared to 2020 (albeit down from $26.52 billion in 2021).

It helps these vendors have customers -- or at least potential customers -- in droves. A December 2021 survey by CSO found that 44% of security leaders at large companies expected their budgets to increase in the upcoming 12 months. And Gartner estimates spending on information security and risk management will total $172 billion in 2022, up from $155 billion in 2021 and $137 billion the year prior.

"The pandemic drove enterprises to accelerate their transition to cloud and saw their workforce become fully distributed. This has led to a dramatic increase in cybersecurity issues -- leading businesses to look for new ways to protect and connect their users, networks, and applications," Ahuja told TechCrunch in an email interview. "We find ourselves in an extremely good place to have the right solution that meets the market needs."

Apurva Mehta and Kumar Mehta, two brothers, co-founded Versa in 2012. They came from Juniper Networks, where Apurva Mehta was the CTO and chief architect of the mobility business unit and Kumar Mehta was the VP of engineering.

Kelly Ahuja, a Cisco alum, was tapped as Versa's CEO in 2016.

Versa provides a vast range of subscription-based software services -- too many to list here -- but positions itself primarily as a secure access service edge (SASE) provider. As described by Gartner in 2019, SASE combines software-based wide area networking and security principles like zero trust into a single service model.

Through partnerships with service providers, Versa connects users to apps in the cloud or data centers with security layered on top -- like data loss prevention tools and gateway firewalls. Concretely, the company offers a hardware-agnostic software stack that provides a single interface -- via the cloud, on-premises or both -- to implement corporate security and networking policies.

"Versa’s portfolio in SASE converges security and networking," Ahuja said, noting that Versa has a "sizable" team working on machine learning and AI-based malware detection. "Versa has developed a differentiated platform that combines AI and machine learning-powered security services edge and software-defined WAN (SD-WAN) solutions that helps customers reduce cybersecurity risk."

When asked about current clientele, Ahuja said that 625-employee Versa's solutions have been deployed by "tens of thousands" of enterprises globally. He declined to reveal revenue figures, instead pointing to San Jose-based Versa's annual contract value, which he says grew 60% over the "past few years."

"Every industry and business are facing similar macro challenges -- high inflation, risk of recession, and supply chain and geopolitical challenges," Ahuja said. "[But] Versa provides a clear value proposition and ROI of reducing cybersecurity risk."

In a June 2021 piece covering Versa's last funding round, CRN's Gina Narcisi pointed out that the SD-WAN and SASE space has seen a great deal of consolidation in recent years. Cisco Systems acquired Viptela and VMware bought SD-WAN vendor VeloCloud, and more recently, HPE’s Aruba snapped up Silver Peak while Palo Alto Networks absorbed CloudGenix.

Last year, Ahuja told Fierce Telecom's Linda Hardesty that Versa wasn't shopping itself. Plans haven't changed, he says -- Ahuja sees the latest financing as setting the firm on a path toward an initial public offering.