SentinelOne CEO says its $155 million acquisition of startup Scalyr gives his firm an opportunity beyond cybersecurity

  • SentinelOne said Tuesday that it is acquiring data-analytics startup Scalyr for $155 million.
  • CEO Tomer Weingarten says the deal will allow SentinelOne entry into the hot data-security sector. 
  • Weingarten also said the company is looking at more acquisitions, and potentially an IPO this year.
  • Visit the Business section of Insider for more stories.

SentinelOne CEO Tomer Weingarten believes his $155 million acquisition of data-analytics startup Scalyr, announced Tuesday, opens up a whole new direction for his cybersecurity firm, which uses artificial intelligence to find signs of hackers and hunt them down.

“The company doesn’t really want me to talk that much about that part of the equation, to be honest,” Weingarten told Insider on Tuesday. “But it is a massive opportunity for us.”

Founded in 2010, Scalyr previously raised $34 million from investors including Heroic Ventures, Shasta Ventures, and Ben Davenport. It was valued at $155 million, the price of the acquisition, after its last funding round in May of 2018, according to PitchBook. 

While other cybersecurity companies have bought data companies to improve their ability to build smarter programs and stop attacks, Weingarten wants to go beyond that by also expanding his 800-person Silicon Valley cybersecurity company into the data realm, where regulation and privacy requirements have driven opportunities for cybersecurity firms. Weingarten believes the acquisition pulls data and security together in a new way. 

“I just saw this in a very effective approach to deal with the massive amounts of data that we see today in the enterprise,” Weingarten said. “Making all that data actionable for cybersecurity is the goal in the short term. In the longer-term, we want to look beyond cybersecurity. We’re going to nurture that data business, we’re going to invest into that, we’re going to keep on growing that business.”

Weingarten also said the company is looking at more acquisitions, and potentially at an initial public offering this year. In September the Silicon Valley company hired veteran chief financial officer Dave Bernhardt to guide them toward an IPO. But Weingarten noted the massive Snowlfake IPO and huge investment rounds such as Databricks’ $1 billion round several weeks ago as evidence that he has several good options in front of him: “There are tons of financial mechanisms in the space today.”

In November, SentinelOne raised $267 million at a $3 billion valuation. The company has raised $697 million total, and Weingarten said he doesn’t know the current valuation after the acquisition, but says the deal was well-received by investors. 

With 50 employees, a $155 million price tag, and a line of business outside SentinelOne’s repertoire, Scalyr brings great potential to his company, Weingarten said. He is keeping the staff and situating Scalyr CEO Christine Heckart as a general manager of data analytics. When COVID-19 lifts, the combined companies will work at a new campus in Mountain View. 

“The security and data analytics industries are uniquely related, and this acquisition provides SentinelOne the opportunity to set the agenda” in the data-driven extended detection and response category, Heckart said in a statement. 

PitchBook analyst Brendan Burke told Insider that SentinelOne’s area of cybersecurity is a hot spot for mergers and acquisitions. “Extended detection and response has emerged as the next wave of endpoint security product architecture and is driving high M&A activity,” Burke said. Previous similar deals include Fortinet acquiring Cybersponse; McAfee acquiring Uplevel Security; and FireEye acquiring Respond Software. 

Scalyr was founded by the creator of Writely, which became Google Docs, Steve Newman, who said in a statement that “I’m excited for the Scalyr team to become part of SentinelOne and solve one of the world’s most pressing big data problems — cybersecurity.”

Under the terms of the agreement, SentinelOne is acquiring Scalyr for $155 million in equity and cash. The acquisition is expected to close during SentinelOne’s first quarter, subject to customary closing conditions. 

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