Drata, a San Diego software startup that helps businesses prove they have strong cyber-security and data-privacy safeguards, has pulled in $200 million in a third round of funding — a hefty amount given the overall pullback in venture capital investment this year.
The round values Drata at $2 billion, according to the company. It comes less than a year after startup raised $100 million in a Series B round, which gave it a “unicorn” valuation of $1 billion at the time.
“We always look at fund raising as a tactic, not as a goal or an outcome, “said Co-Founder and Chief Executive Adam Markowitz. “It allows us to execute for years to come, and at the same time it is validation for what we have achieved up to this point.”
Founded two years ago, Drata’s funding haul is unusual given today’s investing headwinds. Through the first nine months of this year, venture capital flowing into San Diego startups is down 54 percent from the same period in 2021.
While it’s harder to raise money now than it was a year ago, there is capital available for fast-growing startups, said Mike Krenn, head of Connect/San Diego Venture Group.
“The terms aren’t as good as they used to be, but if you have the right growth trajectory and you are reasonable on your valuation terms, there is money out there,” he said.
Drata’s software automates the process of real-time monitoring and documentation of cyber-security and data-privacy controls for audit compliance.
It is built to handle 14 compliance standards and counting, including HIPAA health-information privacy rules, National Institute of Standards and Technology (NIST) cyber-security guidelines, and General Data Protection Regulation mandates, among others.
“The need is greater than ever for what we are doing as companies need to comply with more and more regulation,” said Markowitz. “I think the need for automation is only amplified in tough economic times.”
There is competition from several established firms and startups, including New York-based Laika Inc., which raised $50 million last month for its compliance software suite.
Still, Drata has seen its customer base swell from a few hundred to more than 2,000 firms in the past year. Its headcount has grown from 70 to roughly 300 workers.
The global market for technology addressing Governance, Risk and Compliance (GRC) is forecast to reach $15 billion over the next three years, according to Drata.
This latest funding round was mostly a doubling down by Drata’s existing investors. It was co-led by ICONIQ Growth and GGV Capital. Alkeon Capital also made a significant investment in this round.
Others venture backers include Salesforce Ventures, Cowboy Ventures, S Ventures, Silicon Valley CISO Investments and FOG Ventures.
Several individuals also participated, such as Jeff Weiner of LinkedIn, Frank Slootman of Snowflake and Jennifer Tejada of PagerDuty. Amit Agarwal and Olivier Pomel from Datadog, and Jonathan Rubinstein of Amazon, also invested.