Today, Okta, a company that offers Identity as a Service that works across on-premises applications and cloud services, announced $75M in Series E funding. CEO Todd McKinnon told me he expects this to be the final round of funding prior to going public within a couple of years.
The round is being lead by Sequoia Capital. Secondary investors include Andreessen Horowitz, Greylock Partners and Khosla Ventures, as well as new investors Janus Capital Group and Altimeter Capital. It brings their total funding to-date to $155M.
McKinnon told me it was especially important to get some public market commitments because when they do go public they would have investors who are already familiar with them. In fact, the company had discussed getting this round of funding in the Fall, but decided in the February/March timeframe to accelerate that. This ended up a being a case of spectacularly bad timing because it was right about the same time that startup valuations started to plunge.
They were able to find the public market investment they were looking for and fill in the rest with traditional venture investments.
McKinnon acknowledges there is a lot of competition in the space he calls ‘Identity as a Service,’ including Ping Identity and even Microsoft and Salesforce.com. He said although the big guys don’t have serious products yet, they clearly recognize the strategic importance of identity in the age of cloud and mobile.
He said competition is always scary in a way, and anyone who suggests otherwise is probably lying, but he believes competitive pressure drives his company and all of his competitors. He says while nobody wants a monopoly, the fact is that competition is stressful.
Over the next couple of years, McKinnon has plans for his company including updating the number of applications pre-integrated with Okta from 3,000 today to 10,000 eventually. The goal is to make any application accessible to every end user (or even partners or suppliers) on any device –and he says that takes money.
As he pointed out, this isn’t like in the 1990s when you had to support a version of Windows for three years and you were fine. Today, you have to support a number applications from on-premise ones to cloud services on any number of devices.
The company also will be opening an office in Sydney, Australia. He said they have customers in Asia and Australia already, but this will be the first time they have personnel based on the ground there.
But he says (saying the right thing for investors) that first he wants to get cash-flow, break even and go public eventually.
The ultimate goal though is to be the identity network that holds the mobile-cloud driven economy together. Today, they have over 1,200 customers, which include LinkedIn, MGM Resorts International and Western Union and he believes that is a solid starting point on which to build the company moving forward.
Pat Grady from Sequoia will be joining the Okta Board as part of the deal.
Disclosure: The author has investments with Janus Funds.