Accel Doubles Down on 1Password - $100M Funding

1Password Secures $100 Million in Series B Funding, Valuation Doubles

Toronto-based 1Password distinguishes itself as a rare example of a company that is both profitable and committed to financial transparency.

The company recently announced the successful completion of a $100 million Series B funding round, effectively doubling its valuation to $2 billion.

A History of Independent Growth

Previously operating as a bootstrapped entity, 1Password first secured external capital in 2019 with a $200 million Series A round.

This initial investment, spearheaded by Accel, represented the venture firm’s largest single investment in its 35-year history. Notably, 1Password was already a well-established company at the time, having been founded in 2005.

Notable Investors Join the Round

Accel again led the latest funding round, attracting participation from a diverse group of prominent investors.

These included Ashton Kutcher’s Sound Ventures, Kim Jackson’s Skip Capital, and a number of leading technology executives.

Among these executives were Tobias Lütke, CEO of Shopify; Harley Finkelstein, president of Shopify; Stewart Butterfield, co-founder and CEO of Slack; Anthony Caselena, founder and CEO of Squarespace; Mike Cannon-Brookes and Scott Farquhar, co-CEOs of Atlassian; and Kevin Hartz, co-founder and chairman of Eventbrite.

Strong Financial Performance and Customer Base

1Password has consistently maintained profitability since its inception.

The company recently surpassed $120 million in ARR (annual recurring revenue), as reported by CEO Jeff Shiner.

Currently, over 90,000 businesses utilize its SaaS platform, including well-known organizations such as Under Armour, Shopify, the PGA, IBM, GitLab, Slack, and PagerDuty.

This represents a significant increase from the 50,000 customers the company had at the time of its November 2019 funding round.

Origins and Evolution of the Company

The concept for 1Password originated with founding couples Dave and Sara Teare, and Roustem and Natalia Karimov.

They identified a critical need for robust password management while operating a web development company and grappling with the challenges of managing numerous passwords.

Initially focused on individual consumers, 1Password strategically expanded its services to cater to businesses.

This expansion proved transformative, propelling the already successful company to new heights.

Accel’s Continued Confidence

This strategic shift also garnered the attention of Accel, a firm known for investing in profitable and self-funded businesses.

In both its Series A and B rounds, Accel proactively approached 1Password with investment proposals.

Accel partner Arun Mathew highlighted 1Password’s unique profile, stating that the company’s ability to capitalize on market trends while maintaining strong fundamentals is exceptional.

He expressed hope that the latest funding round will empower 1Password to aggressively pursue market dominance.

Growth and New Offerings

Since its last funding round, 1Password has demonstrated continuous evolution, reaffirming its commitment to innovation, according to Shiner.

The company has significantly increased its workforce, growing from 174 employees to approximately 475, including the establishment of a dedicated go-to-market team.

Furthermore, 1Password has broadened its business offerings with the launch of Secrets Automation in April and, more recently, 1Password Events, an enterprise solution designed to safeguard critical business information.

Additional developments include the release of a Linux Desktop Application and integrations with Slack and Rippling.

Expanding Security Capabilities

Secrets Automation, as explained by Shiner, enables 1Password to protect a business’ infrastructure secrets through machine-to-machine communication.

This expands the company’s capabilities beyond traditional human-to-machine password management.

The launch of Secrets Automation was facilitated by the acquisition of a Dutch company, SecretHub.

Future Acquisitions and Strategic Investments

The company intends to utilize a portion of its new capital to pursue further acquisitions, recognizing the dynamic nature of the cybersecurity landscape.

Accel’s Mathew emphasized that a stronger balance sheet will allow 1Password to strategically assess and capitalize on potential M&A opportunities and investments.

He noted that for nearly 16 years, the company has remained a relatively unknown gem for both businesses and consumers.

Impact of the Pandemic and Remote Work

The COVID-19 pandemic and the subsequent shift to remote work have significantly increased demand for 1Password’s services.

As a benefit, 1Password now provides each employee of a business account with a complimentary family account for home use.

Shiner stated that this offering has been highly valued by users.

Accel’s Vision for the Future

The blurring lines between work and home life are a key factor driving Accel’s continued investment in 1Password.

Accel partner Ethan Choi highlighted the firm’s 24 active security investments and emphasized the importance of this sector.

Choi stated that the increased investment signifies Accel’s belief that 1Password is a critical component of modern security, enabling both productivity and security for employees.

Looking Ahead

Despite its 16-year history, 1Password believes it is only beginning to realize its full potential, according to Shiner.

He expressed excitement about the opportunities that lie ahead and emphasized the need for continued innovation and urgency.

Leveraging Industry Expertise

The insights of the experienced technology executives involved in the funding round were also a significant factor in securing additional capital, Shiner added.

He emphasized the value of the existing relationship with Accel and the added expertise brought by the new investors.