Netskope IPO: Following Rubrik, Backed by Lightspeed

The Cybersecurity IPO Landscape

The cybersecurity industry represents a substantial market, yet startups operating within this space are statistically more prone to acquisition rather than launching an initial public offering (IPO). Even Wiz, previously recognized as a remarkably fast-growing startup, opted to be acquired by Google earlier this year, foregoing its planned IPO.

Recent Cybersecurity Debuts

The past several years have witnessed limited instances of significant cybersecurity IPOs, with SentinelOne in 2021 and Rubrik in the previous year being notable examples.

Next week anticipates the addition of another publicly traded entity in this sector: Netskope, a cloud cybersecurity platform. Notably, Netskope shares its initial and largest investor with Rubrik – Lightspeed Venture Partners.

Lightspeed Venture Partners' Investment

Lightspeed Venture Partners held a 23.9% stake in Rubrik at the time of its public debut, which valued the company at $6.6 billion last year. Regarding Netskope, Lightspeed currently possesses 19.3% ownership in the company, which is targeting a valuation of up to $6.5 billion, as detailed in its updated S1 filing.

Lightspeed’s initial investment in Netskope occurred in 2013, when it spearheaded the company’s $21 million Series B funding round.

With an IPO price range set between $15 and $17 per share, the higher end of this range would yield Lightspeed an approximate $1.1 billion return on its investment.

Key Investors in Netskope

Beyond Lightspeed, other significant investors in Netskope include ICONIQ Growth, holding a 19.2% stake, and Accel, with a nearly 9% ownership position.

Netskope's Core Business

Netskope operates as a Secure Access Service Edge (SASE) provider. The company delivers cybersecurity solutions for enterprise cloud infrastructures, offering products like secure web gateways and firewall as a service.

Its primary competitors in the market are Zscaler and Palo Alto Networks.

Valuation History and Financial Performance

Netskope was last valued at $7.5 billion following a $300 million Series H funding round led by ICONIQ Growth in 2021, a period coinciding with the ZIRP era. Additionally, the company secured a $401 million convertible note in 2023.

However, these capital injections were insufficient to achieve profitability. During the first half of the current year, Netskope’s revenue increased to $328.5 million, up from $251.3 million in the same period last year.

Concurrently, the company’s net loss decreased to $169.5 million from $206.7 million, as indicated in the filing.

IPO Trends and Comparisons

Should Netskope proceed with an IPO at a $6.5 billion valuation, it will join a growing number of venture capital-backed companies that have debuted at valuations lower than their final private market assessments.

Companies like Chime and Hinge Health have also experienced similar situations. Conversely, some recent IPOs, such as Figma and Circle, have demonstrated strong performance with significant gains on their initial trading days.