Vanta Goes From Low-Profile Startup To $500 Million Valuation With $50 Million Sequoia Series A

Christina Cacioppo says she enjoyed the looks on investors’ faces when she opened the books on her software startup, Vanta.

In 2018, Cacioppo had taken Vanta through Y Combinator and raised $3 million in seed investment. Then she went dark, fueling her business, which provides security and compliance software to businesses, through its upfront sales. The company reached 600 customers without a proper website; today, it says it’s helped 1,000 with their SOC 2 compliance audits, passing $10 million in annual recurring revenue while reaching 65 employees.

“People still think we are off in some random corner, which is great,” Cacioppo recalls thinking. “Let them think that, while we get bigger than anyone thought we were.”

Every startup outgrows the build-in-quiet act eventually, however. For Vanta, that means sharing the news that the company’s raised an over-sized $50 million Series A funding round led by Sequoia. All parties declined to comment on valuation. But the investment values Vanta at about $500 million, a source with knowledge of the round tells Forbes.

Vanta’s approach: apply the continuous monitoring of other software businesses, such as Datadog or PagerDuty, to what has until-now been an annual or semi-annual audit scramble. While an auditor still needs to go through a customer’s books, they can do so with Vanta’s reports, which keep a business honest about its security and data compliance year-round. That means fewer surprises, inside and outside a business.

The need for such a product came to Cacioppo at Dropbox, where she worked from 2014 to 2016 as the first product manager on Dropbox Paper, that business’s attempt to compete with collaborative document tools like Google Docs and Quip, now part of Salesforce. After stints in venture capital at Union Square Ventures and as an entrepreneur working on several projects including a video messaging app that was perhaps ahead of its time, Cacioppo had joined Dropbox for big tech company experience.

But rolling out Paper to Dropbox customers, she and her team had drawn the ire of the company’s legal department, who determined doing so would make Dropbox non-compliant in its contracts.“It was frustrating, because we were trying to find product market fit, but you couldn’t just give Paper to anyone who pays for Dropbox,” Cacioppo says.

After spending 2017 studying the market, Cacioppo and co-founder Erik Goldman, no longer a part of the startup, attended YC. The business took off among other companies to have gone through the startup accelerator, eventually reaching Affinity, Lattice, Loom and Clubhouse (the work software one).

One of Vanta’s first customers was Notion, the work software startup that reached a $2 billion valuation in April 2020. There, COO Akshay Kothari says the company is close to receiving its SOC 2 certification with Vanta’s help after several years of using its monitoring tools. “A lot of companies, even us, we’re kind of scared off” by what has been considered a “gnarly” certification process, Kothari says. Vanta, however, serves as a forcing function for companies to get more mature about the security of their data, he says. “Now I wish we had done it sooner.”

With HIPAA compliance in healthcare and ISO/IEC 27001 certifications now supported and more to come, Cacioppo finally decided to hire her first marketing employee last fall, a late move she calls “a badge of honor, which is also pretty embarrassing.” To raise the round, she contacted five investors with whom she’d maintained close relationships, and asked them to keep things quiet to avoid a full-blown auction.

Sequoia’s Andrew Reed was one of them; he says he was impressed by how many Sequoia companies, nearly two dozen, were using Vanta happily. “Vanta helps their customers grow their businesses faster, and when products do that, people tend to talk about them,” Reed says. Offering up some of the entrepreneurs with whom he’s invested as references, Cacioppo called them — and the rest. Their rave reviews and the Sequoia’s track record of supporting big-ambition founders won the day.

With the funding, Vanta plans to keep hiring, including opening a New York office, while also investing in product, more certifications, and marketing. “We’ve been at a one on our PR and marketing dial, and now it’s becoming more obvious it will benefit us, so let’s turn that dial to a 10,” Cacioppo says. “I want to build a large, category-defining internet company that redefines how we think about security and trust in the internet and services.”

Her advice for other entrepreneurs looking to take a similar similar slow-then-sudden approach: focus less on the VC game. And when you do meet firms, put them to work by asking them for intros to their portfolios — a win-win that allows both sides to grow their businesses while scoping each other out.

“I really liked venture, I still really like the inside baseball, all the machinations,” she says. “But if you confuse financing success with company-building success, you will only get one of those things.”