Cato captures $77M in largest funding round

SASE startup Cato Networks has raised $77 million in its largest funding round to date.

The Secure Access Service Edge (SASE) supplier received the investment in a round led by Lightspeed Venture Partners, with the participation of Aspect Ventures, Greylock Partners, Singtel Innov8, U.S. Venture Partners (USVP) and Cato's Co-Founder and CEO Shlomo Kramer, who also co-founded Check Point Software. Last January, Cato announced a funding round of $55 million by the same investors in addition to Cato co-founder Gur Shatz. This latest round brings total funding for Cato to over $200 million.

Cato Networks recently pivoted from SD-WAN to SASE, which Cato's CMO Yishay Yovel says better describes the company's mission since its inception in 2016. While Cato delivers SD-WAN services, Yovel says SD-WAN is just the first step in providing customers with improved management and security of their wide area networks, and Gartner's new "SASE" trend better encompasses this approach.

"Fundamentally, we were never a pure-play SD-WAN company. SD-WAN is a feature of a larger story and always has been," says Yovel. "The SD-WAN companies, such as VeloCloud, Viptela and now CloudGenix, are all becoming part of a larger story for the acquired."

In another sign of that larger story, Palo Alto recently announced plans to acquire CloudGenix this year in a $420 million cash deal.

A complete WAN platform includes edge control and management with SD-WAN, security, cloud integration and remote access functionality for an increasingly mobile workforce – especially in a time where COVID-19 is front of mind, adds Yovel. Last month, Cato launched Cato SDP with Instant Access, a remote access feature for enterprise customers.

The fresh $77 million in funding shows that investors believe Cato is heading in the right direction, says Zeus Kerravala, founder and principal analyst for ZK Research.

"The one thing SD-WAN did is it opened the door for companies like Cato, Aryaka and other startups to be able to offer a different type of service and customers are looking for it," says Kerravala. "The lack of agility from traditional telcos is holding them back. Cato delivers a solid SD-WAN service that's aligned in the direction of where SASE is going and the funding is certainly supportive of that."

Masergy, Open Systems, Aryaka and Cisco's Meraki could be considered Cato's main competitors, says Kerravala, in addition to security vendors Palo Alto, Fortinet and Versa, an SD-WAN supplier that also has its own built-in security features. Scott Raynovich, founder and chief analyst for Futuriom, also says Cato has similarities with Versa, but would liken Cato more to a security supplier like Zscaler rather than a typical SD-WAN company.

"Cato is very focused on security and it's a very cloud-based service," Raynovich explains. "The SD-WAN players all have their different niches and [Cato] is really for people looking for an all-in-one cloud security solution."

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— Kelsey Kusterer Ziser, Senior Editor, Light Reading