Check Point to Buy SSE, ZTNA Startup Perimeter 81 for $490MPerimeter 81 Cuts Valuation by 51%, Becomes Second Cyber Firm to Lose Unicorn Horns
Perimeter 81 will be sold to Check Point for $490 million, but it had to slash its valuation by more than half to seal the deal.
See Also: Secure SD-WAN Customer Success Stories
The Silicon Valley-based platform security vendor said its proposed buy of New York-based Perimeter 81 will fuel the adoption of secure access across remote users, sites, cloud, data centers and the internet. The acquisition agreement comes just 14 months after Perimeter 81 completed a $100 million Series C funding round at a $1 billion valuation, making it the second cybersecurity firm to lose unicorn status (see: What Happens When Cybersecurity Unicorns Lose Their Horns?).
"With the advent of hybrid work and the rise of cloud transformation, the demand for security services that expand beyond the network perimeter is increasing," Check Point Software Technologies founder and CEO Gil Shwed said in a statement. "By leveraging Perimeter 81's capabilities and integrating them into the Check Point Infinity platform, we continue with our vision to deliver the best security."
Check Point's stock is up $2.73 - or 2.16% - to $129.10 in trading Thursday morning. That's the highest the company's stock has traded since Friday. The Perimeter 81 transaction is expected to close by the end of September. This is the 18th acquisition Check Point has made in its three-decade history and the largest deal consummated since November 2006, when the company bought PointSec for $586 million.
Uniting Zero Trust Network Access, Secure Web Gateway
Perimeter 81 was founded in 2018 by Amit Bareket and Sagi Gidali, who used the network infrastructure they had created in 2013 at SaferVPN - which was sold to J2 Global in 2019 - as the basis for Perimeter 81. Perimeter 81 employs 230 people and has raised $165 million in six rounds of outside funding with backing from SonicWall, Insight Partners, Toba Capital and B Capital, according to IT-Harvest.
“This strategic move marks an exciting period for our company, partners, and customers," Bareket, who is Perimeter 81's CEO, said in a statement. "By joining Check Point, a global leader in cyber security for over 30 years, we aim to deliver the premier SASE platform in the market."
Perimeter 81's suite of offerings includes secure web gateway and zero trust network access with full mesh connectivity between users, branches and applications, Check Point said. The company's approach to security service edge combines cloud and on-device protection, and Perimeter 81's technology can be deployed in just one hour as compared to weeks for traditional solutions, according to Check Point.
Bareket told Information Security Media Group in January that Perimeter 81 has attempted to simplify securing remote work by bringing ZTNA and SWG together on a single management console with a single network and single agent to maximize ease of use and robustness. The firm planned to expand from the midmarket into larger enterprises to help simplify networks as they embrace 5G and fiber (see: CEO Amit Bareket on Perimeter 81's Push to Unify ZTNA & SWG).
"We have managed to build a solution that is easy to use," Bareket said in January. "The time to value is very quick. It takes less than an hour to unload and implement. And that's where we win."
A Forrester Leader in ZTNA, But SSE Recognition Remains Elusive
Perimeter 81 was one of five vendors recognized in August 2021 by Forrester as a leader in zero trust network access alongside Palo Alto Networks, Appgate, VMware and Zscaler. Forrester said Perimeter 81 excels at handling nonweb applications such as VoIP and onboarding dozens of applications in less than a month, but it said the firm needs to integrate with Microsoft and add more inline security and analytics.
Neither Check Point nor Perimeter 81 were among the 10 vendors included in April's Gartner Magic Quadrant for Security Service Edge, which named Netskope, Zscaler and Palo Alto Networks as leaders in the space. Broadcom, Cisco and Zscaler accounted for 58% of all SSE revenue in 2022, and Zscaler led the pack with 28% market share, Dell'Oro Group reported in March 2023.
"The demand for security services that expand beyond the network perimeter is increasing."
– Gil Shwed, founder and CEO, Check Point Software
Although both Check Point and Perimeter 81 are technically headquartered in the United States, 70% of Perimeter 81's staff and 46% of Check Point's employee reside in Israel. Both Bareket and Gidali spent three years in the Israel Defense Forces, where Bareket served as a project leader and Gidali did operational visualization.
IT-Harvest estimated a valuation of between $502 million and $679 million for Perimeter 81 and annual revenue of $34.7 million - or more than $152,000 per employee - more than four years after the firm emerged from stealth. Of the 48 security startups to achieve a valuation of at least $1 billion between October 2020 and June 2022, Perimeter 81 is the second to publicly disclose losing unicorn status.
The first cybersecurity unicorn to lose its horns was Cybereason, which saw its valuation fall from $3 billion in July 2021, when it raised $275 million from former U.S. Treasury Secretary Steve Mnuchin’s venture fund, to just $300 million in April 2023, when it closed a $100 million Series G funding round led by SoftBank. Cybereason had over the past year done mass layoffs and replaced founding CEO Lior Div.
"Coupling this new round with a new management team and focus on product innovation sets the company up for long-term growth, making the overall share price or even valuation not as important as our disciplined focus on the company," new CEO Eric Gan told Axios in April. "The company was very disciplined in raising no more than it believes it needs, thus limiting the amount of dilution."