Governance & Risk Management , Managed Security Service Provider (MSSP)
Huntress Raises $60M to Bring Managed Protection to IdentityCEO Kyle Hanslovan Says Series C Money Will Help SMBs Secure Microsoft 365 Platform
Huntress has completed a Series C round to expand beyond the endpoint protection market and bring managed security to identity and cloud.
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The Baltimore-area company said hackers are increasingly going after employee accounts at small and midsized businesses and using the compromised identity to move into other systems via single sign-on, according to co-founder and CEO Kyle Hanslovan. Huntress plans to use its $60 million of funding to help partners and small businesses manage and secure the ubiquitous Microsoft 365 Business Premium tool.
"We're not just going after the basics," Hanslovan told Information Security Media Group. "We're truly providing managed security for both that Microsoft identity and that cloud-based Office setup."
'The Best Time to Pass Your Competition Is When It Pours'
Huntress' funding round was led by Sapphire Ventures, which Hanslovan praised for its understanding of and success with technical late-stage companies such as MuleSoft, Auth0 and JumpCloud. Hanslovan said Huntress has tripled its valuation since closing a $40 million Series B round in May 2021 - though he declined to give an exact figure - and expects to near $100 million in annual recurring revenue this year (see: Artificial Intelligence and the Talent Shortage in Security).
"The best time to pass your competition is when it pours," Hanslovan said. "I'm looking to put a little bit of that rocket fuel on our back and say, 'Hey, while everybody else is struggling to keep alive, we don't have those same problems. We're already growing really well.'"
Configuration management poses the biggest challenge for most small businesses around Microsoft 365, especially if policy exceptions, such as disabling or excluding two-factor authentication, start to be made, Hanslovan said. Once hackers get into a user's Microsoft 365 setup, he said, they like to create advanced forwarding rules for emails so that anything lucrative is automatically sent to a malicious account.
Hanslovan wants Huntress to go beyond detecting mundane attacks against cloud-based infrastructure that involve basic errors such as impossible travel and address very specific and highly targeted attacks against Microsoft 365. While endpoints historically have been the ripest target for hackers targeting small- and midsized businesses, he has increasingly seen adversaries shift their arsenal toward identity.
"The best time to pass your competition is when it pours."
– Kyle Hanslovan, co-founder and CEO, Huntress
Huntress plans to extend its managed identity capabilities beyond Microsoft 365 and watch for stolen credentials that could be used in remote management software to ensure organizations stay ahead of cloud-based identity attacks before they escalate, Hanslovan said. The company has recently added managed security awareness training and managed Microsoft 365 to its longstanding managed EDR tool (see: Huntress Buys Security Training Provider Curricula for $22M).
'You Don't Have to Settle'
The company sees limited competition when serving small businesses and managed service providers, but it has increasingly run into Arctic Wolf and managed security offerings from CrowdStrike, SentinelOne and Microsoft as it does more in the midmarket, Hanslovan said. Huntress remains focused on pairing automation with human expertise to ensure its technology remains affordable for small businesses.
"We are a big, big fish in this small business and MSP market, but as we come into the midmarket, we're just getting known," Hanslovan said. "I have a lot of brand awareness that I have to fix, and I've got to get that message crisp. You can't make that big difference if you can't tell your story very well."
From a metrics standpoint, Hanslovan said the company wants to maintain 100% year-over-year revenue growth, gross margins in the mid-80s and 140% growth for channel partners that add Huntress to their line card. Given the increased focus on profitability from the venture capital community, he said Huntress plans to closely monitor customer acquisition cost, sales efficiency and net dollar retention.
"CISOs are saying, 'I can't break my bank here paying for a managed CrowdStrike solution. What do I do?'" Hanslovan said. "Well, you don't have to settle. Buy something that's tailored to your actual market and your actual problems."