Blog Post

Securing the 99.9%: Why We’re Excited to Lead JumpCloud’s Series F

Securing the 99.9%: Why We’re Excited to Lead JumpCloud’s Series F
Investment / September 13, 2021
Written by , Jai Das , Casber Wang

Sapphire understands the passion that all of us at JumpCloud feel around innovating new solutions that are disrupting traditional approaches to tech. They understand the opportunities for us as a product-led growth company. They embrace our vision for what a cloud directory platform can and should be. They bring unique and valuable market insights that will help us improve and accelerate every aspect of our business. And they understand our desire to create a generational company that lasts and delivers outsized returns for our customers, our employees and of course our shareholders.

Everyone on the Sapphire team has come to JumpCloud in a spirit of partnership and collaboration. Jai and Casber share their insights and experiences freely and candidly. And we share a common ethos to Make Work Happen and get things done.

As JumpCloud continues to innovate and grow–and as we reimagine every aspect of a cloud directory platform–Sapphire is an ideal partner to help us and our customers realize our boldest business aspirations.

— Rajat Bhargava, CEO, JumpCloud 

More breaches, higher stakes and increased system complexities have elevated cybersecurity to the top of executive minds over the past few years. Cyberattacks are now so common, recent reports show that hackers attack a computer in the U.S. every 39 seconds

Profit seeking bad actors that once focused on hacking large enterprises and state organizations with high value targets, access to the most valuable information and could afford to pay large ransoms, are now targeting SMBs and even small businesses. The boom of our digital footprint, e-commerce, social media and user willingness to share personal and financial information across platforms, alongside the commercialization of HaaS (Hacking-as-a-Service), has now left all businesses vulnerable to cybercrime. 

Some of the most at risk businesses are SMBs, which represent 99.9% of all U.S. businesses and 348 million globally. In fact, 43% of cyberattacks target small businesses and 60% of small businesses that are victims of a cyberattack go out of business within six months. These businesses need protection, but the challenge is that most cybersecurity products have been created for enterprises that have security (or at least engineering) resources to manage the complex infrastructure of most solutions. 

That’s why we’re excited to back JumpCloud and lead the company’s Series F. JumpCloud is a cloud-native all-in-one identity, access control and device management solution for SMBs and the mid-market that’s fully reimagining Active Directory, Microsoft’s product, which stores information about objects on a network and makes the information available for admins to find and use.

Identity and access control at the heart of cyber defense

For a number of reasons, but most recently due to COVID and remote work, today’s workforce no longer resides solely in offices. This means they’re no longer behind firewalls, interacting with highly protected systems and servers. Given the proliferation of mobile devices, external resources and cloud applications, most employees still work from outside a secured perimeter, even when users are all within the network,

Today’s technology infrastructure is rarely built around a few easily perimetered servers. For true and reliable cloud security and among a distributed workforce, identity needs to move to the very core of a company’s cyber defense strategy. When there is no more perimeter, only identity can serve as the primary control for security. Companies, both large and small, are realizing that cloud identity and access management is key to truly protecting their organizations. That’s why we are seeing that while the overall cybersecurity market is expected to grow at around 11% CAGR, the cloud identity and access management market is expected to grow at 19% CAGR

Cloud-native infrastructure deserves cloud-native cyber solutions

Since 1999, Microsoft has been providing Active Directory (AD) for free as part of the Windows Server. As such, it’s no wonder it has become the default system of record for identity today, claiming more than 95% of enterprise market share. Most Identity-as-a-Service (IDaaS) providers, such as Okta and Auth0 (a recent Sapphire exit), provide functionalities (Single Sign-On, Multi-Factor Authentication, etc.) and workflow on top of AD, but JumpCloud aims to replace and extend AD in the cloud entirely. 

For how prevalent AD has been, it wasn’t built for the modern business, and certainly not those undergoing digital transformation. It wasn’t built to support different types of operating systems (Windows, mac OS and Linux), WiFi/VPNs and SaaS apps like Jira, Salesforce, GitHub and Slack. It wasn’t built to also support AWS cloud infrastructure, for example, and it certainly can’t demonstrate modern security baselines across an entire heterogeneous environment. Taking that all into account, the value of an AD alternative like JumpCloud becomes clear–especially at the lower, mid-end of the market. 

JumpCloud is also a great solution for larger customers who have been utilizing AD heavily. JumpCloud helps them extend AD to virtually all of their IT resources, whether or not those resources are inside the domain, are Windows-based or are Kerberos-supporting. Moreover, JumpCloud also provides a directory-level integration instead of patching through web-based SSO.

Providing access to essential security resources for SMBs

It’s likely that many SMBs (between 10-100 employees) have been getting by without a centralized directory, manually managing user accounts across various hardware and software resources. This cumbersome way of managing identity leads to a whole host of issues when it comes to on and off-boarding and provisioning.  

Employees, whether they know it or not, can pose a serious data risk to the majority of companies, especially at the time of offboarding. Recent data found that 89% of employees were able to access sensitive corporate applications well after their departure. That’s a serious problem that JumpCloud solves by providing a cloud-based platform for centralized user management, provisioning and deprovisioning, and system management for virtually all IT resources. The company was built to provide an all-in-one platform (directory + SSO + device) for SMB and mid-market customers that is easy to deploy (cloud-based) and integrated out-of-the-box (SaaS integrations).

Visionary leadership with strong industry and company building experience

As we seek to partner with companies of consequence, it’s the team that ends up being the most critical driver of success. We first met JumpCloud founder and CEO Rajat Bhargava in 2018. Despite the company being too young for us to invest at the time, we came away incredibly excited about what he was building and his product-driven approach to the business. 

Besides being a product visionary, Rajat is laser focused on execution and has nailed the plan he had laid out for us a couple times in a row. Combining both product vision and focused execution, he has been able to attract a strong management team, many of whom he hired only in the last two years: Kevin Biggs (CRO), Jagadeesh Kunda (CPO), Cate Lochead (CMO) and many others. Furthermore, JumpCloud’s customers are some of the happiest. With more than 800 reviews on G2 averaging 4.5, JumpCloud was named a top product for cloud IT management in 2021. The team’s combination of being down-to-earth yet fiercely competitive with an unrelenting desire to win deeply resonated with us. 

Sapphire has a long history investing in cybersecurity companies and has seen portfolio companies Auth0 and Sumo Logic exit in the past year. In addition, our investment in Monday.com, which recently went public, has also taught us the importance of product-led growth at scale. We’re looking forward to partnering with Rajat and the JumpCloud team on their mission to Make Work Happen®!

Disclaimer: Nothing presented within this article is intended to constitute investment advice, and under no circumstances should any information provided herein be used or considered as an offer to sell or a solicitation of an offer to buy an interest in any investment fund managed by Sapphire Ventures, LLC (“Sapphire”). Information provided reflects Sapphires’ views as of a time, whereby such views are subject to change at any point and Sapphire shall not be obligated to provide notice of any change. Nothing contained in this article may be relied upon as a guarantee or assurance as to the future success of any particular company. Companies mentioned in this article are a representative sample of portfolio companies in which Sapphire has invested in which the author believes such companies fit the objective criteria stated in commentary, which do not reflect all investments made by Sapphire. A complete alphabetical list of Sapphires’ investments made by its direct growth and sports investing strategies is available here. Various content and views contained within this article represent those of third party guests, which do not necessarily reflect the views of Sapphire. Such views are subject to change at any point and do not in any way represent official statements by Sapphire. While the Sapphire has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein, which is subject to change. Past performance is not indicative of future results.