Cloud security company Zscaler, based in San Jose, has recently made headlines with its acquisition of cybersecurity startup Avalor after just 26 months in operation. According to reports, the deal was made for a whopping $310 million in cash and equity.
In an official press release, Zscaler founder and CEO Jay Chaudhry expressed his excitement for the acquisition, citing the expanded capabilities it would bring to Zscaler’s platform. These include streamlined reporting of security incidents, incident mitigation, asset discovery, data classification, and security policy generation, among others.
“AI is only as good as the underlying data, and many solutions lack the additional context and knowledge from data sources across the enterprise to truly leverage security-specific AI models,” Chaudhry stated. “Zscaler operates the world’s largest security cloud with the most relevant data to train security-specific language models, and with the Avalor acquisition, we can more effectively identify vulnerabilities while predicting and preventing breaches.”
Avalor was co-founded by Raanan Raz and Kfir Tishbi, who previously led the engineering team at Datorama, a marketing analytics company acquired by Salesforce in 2018. Raz and Tishbi had worked together at Datorama before and after the Salesforce purchase.
Avalor serves as a central point for cybersecurity assets, controls, identities, vulnerabilities, bugs, and other data points, allowing security teams to aggregate, normalize, de-duplicate, and track risk data from discovery to remediation.
This concept is not unique, and there are other startups tackling the same problem, such as Securiti and Dig Security. However, what sets Avalor apart is its ability to handle data from any source in any format, as well as its unique set of vulnerability risk management and prioritization tools.
Before being acquired by Zscaler, Avalor had secured $30 million in funding from investors like TCV, Salesforce Ventures, Jibe Ventures, and Cyberstarts. With the acquisition, Raz believes Zscaler will help take Avalor and its approximately 80-person team to new heights.
“With Zscaler, we get instant access to a set of resources it would have taken years for us to develop organically – including 7,000 customers, 4,200 channel partners globally, and near-ubiquitous customer awareness,” Raz wrote in a blog post on Avalor’s website. “We’ll continue to operate independently as a complete Avalor team, with all the support and resources of the amazing Zscaler behind us.”
This is Zscaler’s third acquisition, following Canonic (a startup focused on protecting against cyberattacks on software-as-a-service products) and Trustdome (a cloud infrastructure entitlement platform). Founded in 2007 by Chaudhry and K. Kailash, Zscaler went public in March 2018 and currently has approximately 7,000 employees and a market cap of around $30 billion.
As Chris Metinko of Crunchbase noted, Zscaler’s acquisition – along with others in the cybersecurity space – could help spur activity in a somewhat stagnant cyber M&A market. Last year, there were only 66 M&A deals involving VC-backed cybersecurity startups, a 26% drop from 2022 and over a 50% decline from 2021.
So far in 2024, there have been 18 cybersecurity-related mergers and acquisitions, with notable moves made by Wiz, SentinelOne, and Crowdstrike.
