2016 IPO Prospects: Illumio Rides On Security Trend

| About: Illumio (ILLM)

Summary

The Illumio platform offers visualization and control of enterprise applications while constantly inspecting and adapting to the computing environment it's protecting.

It allows organizations to have complete visibility behind the firewall, irrespective of where it is hosted - be it their data center or the public cloud.

Given its impressive client list which includes the likes of Morgan Stanley, Plantronics and CAA, its product is well accepted.

According to a report by research firm IHS, the global network security appliance and software market was trending at a $8 billion annual run rate as of 2015. The analyst expects the market size for data center and carrier appliances and virtual security appliances to grow 42% over the period 2015 through 2019. Here's an interesting story of IPO candidate Illumio (Private:ILLM) that has helped take network security to the next level.

Illumio's Offerings

Sunnyvale-based Illumio was founded by security specialists Andrew Rubin and PJ Kirner. The two met to discuss about their understanding of security and world views. During the conversation, they spoke about how security was no longer just firewall and intrusion detection. In the world of virtualization and public cloud, it meant a lot more. Historical instances of data breaches indicated that companies needed to understand and secure the internal environment as well. Essentially, they needed to answer the question "what else does security require now that was never required in the past for the world of cloud where things are supposed to be very global and dynamic?" It was this question that led to the setting up of Illumio.

As they continued their discussion further, they realized that there was a market opportunity to deliver a vigilant and adaptive security platform that would work in any data center or cloud environment - independent of the network and hypervisor. The duo worked on the concept of the product for nearly a year where they went into great detail to define, what is now, the Illumio Adaptive Security Platform. Illumio was able to develop a very successful product because it was designed in close consultation with potential customers.

The Illumio platform offers visualization and control of enterprise applications while constantly inspecting and adapting to the computing environment it's protecting. It allows organizations to have complete visibility behind the firewall, irrespective of where it is hosted - be it their data center or the public cloud. To make the product work, Illumio places some code on every machine in the organization to watch the apps. The Illumio ASP is a distributed software platform that protects communication within and across tiers of applications by creating secure segments to compartmentalize workloads and applications, thus reducing the attack surface exposed to cyber vulnerabilities.

Illumio's Financials

Illumio has an interesting financing story. Most venture backed companies need to deliver a product or a business service before they get funded. But Illumio had spent time detailing the product, its architecture and the final output and were thus able to get the concept funded from Andreessen Horowitz in early 2013. Illumio is privately held and does not disclose any financials. It has been venture funded so far with $142.5 million in rounds led by Accel, BlackRock and General Catalyst Partners. Other investors include AME Cloud Ventures, Data Collective, Formation 8, Harmony Partners, John Thompson, Juniper Networks, Kyle Widrick, Marc Benioff, Jerry Yang, and Valor Capital Group. Its last round was held in April 2015 when it raised $100 million in a round led by Accel and BlackRock at a valuation of more than $1 billion. In 2013, the company was valued at $14 million.

Illumio aspires to be a public company soon. Given its impressive client list which includes the likes of Morgan Stanley, Plantronics and CAA, its product is well accepted. I would like to see its financials to comment on its IPO potential, but the company looks strong. Illumio will need to worry about competition from the likes of vArmour - another startup that too came out of its stealth mode recently. vArmour protects server to server traffic within data centers and also claims to revolutionize security offerings for the virtualized environment. The company has the backing of Highland Capital Partners, Menlo Ventures, Citi Ventures, Work-Bench Ventures, Allegis Capital and Draper Nexus Ventures in its $42 million funding.

Disclosure: None.

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