Cybersecurity firm targets $100 million in IPO filing

CLEARWATER — Cybersecurity firm KnowBe4, one of the fastest-growing companies in the region for several years, has filed plans for an initial public offering. It plans to raise at least $100 million through the IPO, according to its March 19 public filing.

Clearwater-based KnowBe4 posted $174.9 million in revenue in 2020, up 45% from $120.6 million in 2019, the filing shows. The 2020 revenue figure is up 616.8% from $24.4 million in 2016.

Private equity giant KKR invested about $300 million in KnowBe4 in March 2019, a placement that valued the company at $800 million. That valuation has since passed $1 billion. KKR is one of the lead underwriters of the IPO, according to the filing. Goldman Sachs, another underwriter in the IPO, invested $30 million in KnowBe4 in 2017, part of a Series B Round where the company raised $44 million.

On the flip side of the growth, the company, according to its risk acknowledgments in the SEC filing, “has a history of losses” and an accumulated deficit of $161.3 million through Dec. 31. It posted net losses of $124.3 million and $2.4 million in 2019 and 2020, respectively.

KnowBe4’s niche is in its simulated phishing platform, which it sells on a subscription basis to some 37,000 corporate customers. Founder and CEO Stu Sjouwerman, a Business Observer Top Entrepreneur in 2019, worked in the antivirus software field before he launched the company in 2010.  The company now has some 1,000 employees.

“When I started KnowBe4 in 2010, I had been in cybersecurity for 15 years, Sjouwerman writes in a letter to potential shareholders in the IPO prospectus filed with the Securities and Exchange Commission. “Through that experience, I realized that despite the billions of dollars spent on security products, more often than not, it was the human letting the bad guys in. Here’s the issue: organizations have been placing their faith — their spend — in the wrong thing. So, while the cybersecurity industry has been focused on the idea that better products will solve security problems, I started KnowBe4 to focus on the human. Our mission became enabling employees to make smarter security decisions, everyday.”