Cato Networks Gets Big VC Infusion, Promises Channel Investment

Secure access service edge (SASE) provider Cato Networks sits at a valuation of more than $3 billion, according to participants in its latest funding round.

Cato recently raised $238 million in a equity investment round that LightSpeed Venture Partners led. As a result, LightSpeed founder and managing director Ravi Mhatre will sit on the Cato board of directors.

“Lightspeed has a proven track record of supporting innovative companies that successfully disrupted and transformed huge legacy markets,” said Mhatre, who has sat on the boards of directors for companies like MuleSoft, AppDynamics, Zscaler, Nutanix and Rubrik. “I am excited to join Cato’s board of directors to help guide the company toward its next phase of growth as it continues to expand its product offerings and scales global sales, marketing and branding.”

Lightspeed’s Ravi Mhatre

Adams Street Partners, Softbank Vision Fund 2, Sixty Degree Capital and Singtel Innov8 also participated in the funding round.

Total funding for eight-year-old Cato Networks has reached $773 million, according to the company. Cato reached a reported $100 million in annualized recurring revenue in 2022 and continues to draw attention from analysts in the network security market.

Fernando Montenegro, senior principal analyst for Omdia‘s cybersecurity infrastructure security intelligence service, pointed to the unique niche Cato has carved out.

Omdia’s Fernando Montenegro

“Our research points to Cato being in a strong position in the market, on account of a combination of its capabilities and its business model, which is heavily centered on the notion of security as a service,” said Montenegro. (Omdia shares a partner organization, Informa Tech, with Channel Futures.) “Existing security vendors are more on a transition to that model, having had more of a product-centric model until now. To us, further adoption of Cato in the enterprise is a likely progression, with the nuance that the limiting factor so far may be more on navigating the go-to-market challenges as opposed to specific technical roadblocks.”

Partner Impact from Cato Networks Funding Round

The Tel Aviv- based vendor stated that it will scale in three main areas through the investments. The company intends to reach a “broader audience.” It also expects to grow its engineering and product team.

Cato Networks’ Frank Rauch

And in the bullet point the channel will find most interesting, Cato Networks will expand the base of partners that offer its managed SASE services.

“Today’s announcement further solidifies Cato Networks’ commitment to being a ‘channel-first company,’” global channel chief Frank Rauch said. “We are investing in our channel ecosystem to help partners worldwide sell Cato managed SASE services and give them a competitive edge.”

Rauch, a channel veteran from the cybersecurity, cloud and IT infrastructure industries, joined Cato at the beginning of the year. His tenure has seen Cato grow its systems integrator and reseller partner base as well as its network service provider partnerships.

Shelby Technology Solutions’ Kat Lopez Shelby

(Above: Cato Networks channel leader Frank Rauch joins Channel Futures’ Coffee with Craig and James podcast.)

Kat Lopez Shelby sources Cato solutions through the agency model for Shelby Technology Solutions. She said it will be interesting to see how Cato’s new investments play out.

“Cato has always been an excellent solution for your midsize and enterprise clients. In my experience, they have been invested in the channel and willing to come out to West Texas to meet with clients. I hope that will continue to be true going forward,” she said.