Data Security Startup Very Good Security Raises $35 Million To Grow

CEO Mahmoud Abdelkader plans to use the Series B funding to triple Very Good Security’s headcount over the next year by beefing up its sales, marketing, customer success, engineering and R&D teams.

Very Good Security has raised $35 million in a Series B round led by Goldman Sachs to help more companies safeguard their sensitive data.

The San Francisco-based data security startup wants to triple its headcount over the next year from 82 people today by beefing up its sales, marketing, customer success, engineering and R&D teams, co-founder and CEO Mahmoud Abdelkader said.

The company provides customers with synthetic, aliased data that can be used in place of sensitive data like payment information, personally identifiable information, access credentials, or health records.

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“We just needed more money to win the market faster,” Abdelkader told CRN.

Very Good Security (VGS) wants to grow its sales organization from 8 people today to at least 25 people by the end of 2020 as it pursues opportunities around digital transformation and minimizing security liability in mergers and acquisitions, Abdelkader told CRN. Hires on the customer success team, meanwhile, are expected to streamline client adoption and implementation, according to Abdelkader.

The marketing hires will be focused around product marketing to help VGS explain its value proposition to a broader audience and position the company in a way that’s easy for the masses to understand, Abdelkader said. VGS only sells direct today, Abdelkader said, but expects channel partners to be a key part of its future distribution strategy once the company’s new sales and marketing hires are in place.

From a technology standpoint, Abdelkader said VGS would like to use the funds to invest in confidential computing so that it can better process, interact and operate on sensitive or encrypted data found on some semiconductor platforms or chips. This will help VGS address hardware enclaves within companies where homomorphic encryption has taken place without having to decrypt the data itself, he said.

VGS will also examine M&A opportunities that allow the company to address security needs around business process automation as operations shift toward a continuous integration and continuous delivery (CI/CD) model, Abdelkader said. Moving into this adjacent area will help VGS capture business from enterprises that are interested in embedding security from the start of the development process.

Organizations using VGS can eliminate the need to store sensitive data within their own systems, according to the company. VGS said it facilitates the secure exchange of data with any approved endpoint, allowing clients to retain full use and control over their data without the liability, breach risk or compliance burden of having to maintain a secure data environment themselves.

Very Good Security (VGS) was founded in 2015, and counts Brex, Travel Bank, Deserve, Fivestars, and LendUp among its customers. The company has raised $44.9 million in three rounds of outside funding, according to the company, with Andreessen Horowitz leading a $8.5 million Series A round in August 2018.

“Consumers’ desire for privacy does not have to be at odds with businesses’ ability to achieve their objectives,” Andreessen Horowitz Partner Alex Rampell said in a statement. “VGS is unique in that it lets companies use sensitive data without needing to see it or store it themselves. It is a win for both sides.”

Andreessen Horowitz and Vertex Ventures US also joined Goldman Sachs’ Merchant Banking Division in funding VGS’s Series B round. The division of Goldman Sachs has backed growth stage and technology companies globally since 1982, investing approximately $100 billion of capital since 1986 through various funds, according to the company’s website.

Corporate data is under increasing scrutiny from consumers and regulators alike as expectations of how data is secured and shared evolve, according to David Campbell, a managing director in Goldman Sachs’ Merchant Banking Division. The investment banking giant’s support of VGS should help firms ensure user privacy and data security without compromising functionality or business outcomes, Campbell said.

“Securing data is traditionally complex and expensive,” Campbell said in a statement. “VGS’ unique solution redefines the challenge by removing sensitive data from systems, making them easier to build, secure and manage, reducing both time and cost of securing data.”