Encryption & Key Management , Next-Generation Technologies & Secure Development , Security Operations

Keyfactor Earns $1.3B Valuation After Sale of Minority Stake

A machine identity management provider led by a former Tricentis executive notched a $1.3 billion valuation after receiving a minority investment from Sixth Street Group.

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Cleveland-based Keyfactor said the funds will support increased market demand for technology that secures devices, simplifies public key infrastructure and automates certificate life cycle management. The rise of machine identities, the looming threat of quantum computing and the rapid explosion in connected devices have left many companies scrambling to effectively tackle the issue of securing digital identities.

"The newly acquired capital from Sixth Street will fuel our business as we continue this trajectory of hypergrowth," Keyfactor CEO Jordan Rackie said in a statement. "They bring the right experience, financial prowess and strategic network we need to empower Keyfactor in this next chapter."

The company's compound annual growth rate over the past three years exceeds 70%, and Keyfactor's technology is used by more than 1,500 organizations to build and maintain digital trust. A Keyfactor spokesperson told Information Security Media Group that Rackie wasn't immediately available for additional comment.

What Sixth Street Growth Brings to the Table

Sixth Street Growth invests in mid- and late-stage technology companies and works with management teams at portfolio companies to accelerate organic and inorganic growth. The investment firm has a handful of investments in the cybersecurity space including IT and security management provider Kaseya, data governance and protection provider AvePoint and cloud file service provider Nasuni.

"Organizations must find a way to enable true digital trust in a rapidly evolving and increasingly complex IT/IoT environment," Sixth Street Growth Managing Director Alex Katz said. "Given the team's proven track record of innovation and the platform's ability to manage digital identity at scale, Keyfactor is uniquely positioned to help enterprises as the trusted provider of machine identity management."

Keyfactor's industrial cybersecurity product protects connected sensors, machines and operational technology against disruptive ransomware and IoT attacks, according to IT-Harvest. The offering allows firms to quickly adapt new cryptographic algorithms and standards, navigate complex supply chains with zero trust manufacturing, and obtain complete visibility and control over certificates, keys and secrets.

The company was founded in 2001, employs 412 people and raised more than $200 million from private equity giant Insight Partners in January 2019 and April 2021, according to IT-Harvest. Former Tricentis global revenue leader Rackie took over in May 2019 as Keyfactor's president and CEO, and Keyfactor co-founder and longtime CEO Kevin von Keyserling subsequently shifted to the chief strategy officer role.

Keyfactor's Path to Exponential Expansion

The firm rebranded in November 2018 from Certified Security Solutions to Keyfactor, and two months later it hauled in $77 million from Insight Partners to continue its market expansion. In April 2021, Keyfactor received a $125 million growth investment from Insight Partners and merged with certificate authority provider PrimeKey to become the industry's first machine identity management platform (see: Identity Management at the Core of Recent M&A Activity).

"Keyfactor continues to successfully seize the challenge of helping enterprises prepare for the rise of digital identities," Insight Partners Managing Director Thomas Krane said in a statement. "We've watched the company thrive under Jordan and his team's leadership, and we eagerly anticipate the promising path ahead."

Nearly 60% of Keyfactor employees are based in the U.S., and more than one-quarter are in Sweden, where PrimeKey was headquartered. The remaining workers are scattered across Germany and the U.K. IT-Harvest estimated Keyfactor has annual recurring revenue of $76.4 million - or more than $185,000 per employee - and a valuation between $979 million and $1.325 billion based on funding and revenue data.