Vade Secure, which specializes in predictive email defense technology for Microsoft Office 365 and other systems, has raised €70M (US$79.2 million) from General Catalyst. Moreover, Datto founder and former CEO Austin McChord, now at General Catalyst, is a Vade Secure investor and joins the company's board to help build out the company's go-to-market strategy with MSPs (managed IT service providers).
McChord and Vade Secure CEO Georges Lotigier may provide early clues about the MSP strategy next week during DattoCon19, the major Datto conference in San Diego.
The story so far: Vade Secure protects enterprises and small-medium businesses (SMBs) against email-borne cyber threats targeting their employees. The company's installed base protects more than 500 million inboxes across 5,000+ global customers. Those protected systems generate threat intelligence to "continually refine highly accurate machine learning models, resulting in far lower false positive/false negative rates and unique graymail classification capabilities," the company claims.
Vade Secure will continue to serve the enterprise and OEM markets. But watch for a major Vade Secure for Office 365 push involving MSPs and aggregators to service SMBs across North America, Europe, and Japan, the company says.
In addition to McChord, two other highly respected General Catalyst members will join Vade Secure's board. They are Paul Sagan (Former CEO of Akamai Technologies) and Matthew Brennan.
Also of note: Stephan Dietrich, General Catalyst Executive-In-Residence, Co-Founder/CEO of Neolane, Inc. (acquired by Adobe), and current Vade Secure Board Director, will co-invest alongside General Catalyst and remain on the company's Board to serve as Chairman, the companies say.
Austin McChord on Vade Secure Investment, MSP Focus
In a phone conversation with ChannelE2E, McChord described several reasons for his alignment with Vade Secure, and the potential upside for MSPs.
The paraphrased conversation and key takeaways go something like this: Vade Secure has scale and global ISP (Internet Service Provider) expertise -- which is far different than a traditional enterprise software company serving CIOs. While Global 2000 CIOs typically want their IT departments to fine-tune security products on their own, ISPs need lower-touch solutions that scale to millions -- actually, billions -- of users. Vade Secure's platform does exactly that, McChord asserts.
Those same lessons in the ISP sector -- where Vade Secure has a massive installed base, including Comcast -- apply to the MSP sector, McChord asserts.
"The MSP space is a margin game," he says. "MSPs don't have time, energy or budget to run down false alerts. Those false alerts cut MSP margins. For email security, MSPs really need something that's easy to deploy and automate. It has to be low-touch to no-touch on a per-account basis. Vade Secure is exactly that."
Moreover, Vade Secure blends machine learning and artificial intelligence with a team of security experts -- think of them as SOC (security operations center) analysts -- who quite literally know the spammers and hackers hitting email systems worldwide, he says. "It's this crazy cat and mouse game that requires a real human component in all that; Vade Secure has that talent in-house."
Vade Secure Funding, MSP Push: Executive Perspectives
In a prepared statement about the General Catalyst investment in Vade Secure, CEO Georges Lotigier said:
"I am truly excited about this investment from General Catalyst. It validates our strategy and, more importantly, allows us to accelerate our goal to revolutionize the email security market through the application of machine learning and a comprehensive view of threats as they emerge in real-time worldwide. With the funding, we will continue to invest in our AI-based threat detection engine and build on Vade's leadership in email security for ISPs. In addition, we have a unique opportunity to capitalize on the market disruption caused by the industry shift from on-premise hosted email to the adoption of cloud-based email platforms. With a significant advantage in our core technology and easy-to-implement solution, we plan to rapidly become the de facto standard for Office 365 email protection, in a complement of the platform's own security."
Adde McChord in a prepared statement:
"As an entrepreneur who built Datto from the ground up into a multi-billion dollar business, I lived and breathed MSPs. From the moment I first saw Vade Secure, I realized the company's immense potential to be an essential piece of solving cybersecurity for MSPs. The instantly deployable O365 protection is the perfect mix of enterprise-grade security and total automation that today's MSPs need."
McChord is well-known for launching and growing Datto as a technology company focused purely on MSPs. Vista Equity Partners acquired Datto and tucked Autotask into the business in 2017. McChord exited in late 2018 and soon after revealed his new role with General Catalyst.
Technology Companies Embracing MSPs: Help Wanted
McChord's move into venture capital is the latest sign that investors have growing faith in MSP-centric technology startups. But many of those startups need help to truly understand MSP business, finance, management and consumption models.
