Market demand for cybersecurity products helps Devo raise $250M at unicorn valuation

Devo, a Boston-area startup focused on log management and cybersecurity, announced this morning that it has closed a $250 million round of funding. The new capital values Devo at $1.5 billion.

Dubbed a Series E by the company, TCV led the new investment, while two other new investors — General Atlantic and Eurazeo — also took part. As is common with rounds of this size, a bevy of prior investors kicked in cash as well. The new unicorn told TechCrunch that the round was pre-empted a few months ahead of when it had planned to raise and that it was four times oversubscribed.

How did Devo manage to attract that level of interest? Revenue expansion, we reckon. The company posted solid growth in the last year, according to CEO Marc van Zadelhoff, telling TechCrunch that Devo doubled revenue, employees and customers over the time frame. Van Zadelhoff also said that it’s the company’s goal to double again in the coming year.

For startups already at scale, doubling is a common target. So much so, in fact, that 100% growth later in a startup’s life is part of a well-worn rule of thumb for how to scale toward an IPO.

And the company brought up its future IPO plans unbidden, telling TechCrunch that its new capital will allow it to set up for an IPO in around two years. Given that guidance, we expect Devo to either get to its public offering on this tranche of cash or perhaps with one more slug of funds before it hits go on an S-1 filing.

But all that’s the financial arcana. What does the company actually do?

The hell is log management?

In corporate-speak. Devo sells “cloud-native logging and security analytics.” If that doesn’t help your comprehension much, no worries. We got you.

When you interact with a digital product, it emits exhaust in the form of a log file: User x did y with z product at q time, that sort of thing. Big companies generate a plethora of such files, given that they have many users, and diverse — perhaps even complex! — products on offer.

In the simplest terms, Devo has built a service that compiles log files from customers into a central repository, storing 400 days’ worth of the data in a quickly retrievable fashion. From there, it offers two products that pull from those stored log files: one focused on cybersecurity and the other focused on IT support. Per van Zadelhoff, the cybersecurity tool is by far the more popular of its two offerings.

The log platform powers both. To help explain what we mean, let’s use an analogy I ran past Devo’s CEO during our call that seemed to pass muster: Imagine a company’s collected log files are a form of broth or stock. From there, Devo’s cybersecurity and IT-focused products are akin to different soups (services) made from the same base liquid (log data). Same foundation (broth), different focus (soup flavor).

It’s not perfect as far as comparisons go, but we hope that it helps all the same.

TechCrunch was curious about the 400 days figure. Why is that the correct window for keeping log files handy? It’s a 13-month time frame; in that period, the company will have a full year’s log data for customers, along with one more month to allow for year-over-year comparisons. That seems pretty reasonable.

Why not store even more? Given the sheer amount of data in question, it’s probably a tale of diminishing returns, though falling storage and compute costs over time, we suppose, could make it economical to expand the window somewhat. We’ll see.

Devo intends to use its new capital to grow its team, as all tech upstarts do when they raise new funds, along with working on allowing other companies to build atop its log platform and international expansion. The company also mentioned the possibility of tuck-in acquisitions.