Channel investors, Content, MDR

Arctic Wolf Funding: $4B Valuation for MDR Security Startup?

Arctic Wolf, a Top 40 MDR Service Provider, is seeking to raise a new round of venture capital funding at a $4 billion valuation, Bloomberg reports.

Bob Skelley, Arctic Wolf
Bob Skelley, senior VP of global channels, Arctic Wolf

Arctic Wolf initially pitched itself for SOC (security operations center) as a service (SOCaaS) opportunities. But more recently, the cybersecurity startup has emphasized various managed security services. Indeed, the company develops security software and related services to address managed detection and response (MDR), risk mitigation, cloud monitoring, and managed security awareness training.

Arctic Wolf pivoted to a 100 percent channel strategy in May 2019. Dell, Microsoft and EqualLogic veteran Bob Skelley joined as senior VP of global channels in November 2020. The company's channel partner program gained defined tiers and more benefits in June 2021. Key partners include global distributor Ingram Micro.

Arctic Wolf Funding Rumor, Previous Venture Capital Rounds

The new funding round is expected to be led by existing investor Viking Global Investors, with participation from such existing investors as Lightspeed Venture PartnersRedpoint Ventures and Unusual Ventures, Bloomberg reports. Neither Arctic Wolf nor Viking Global offered a comment to Bloomberg about the rumored new funding round.

If the funding rumors are true, then Arctic Wolf's valuation has more than tripled in less than a year. Moreover, the new round would be the security startup's third raise in little more than one year. Two earlier rounds, according to MSSP Alert, involved:

MDR Market Growth, Funding, Mergers and Acquisitions

Arctic Wolf appears to be growing rapidly. Still, actual revenue and net income figures are undisclosed, and the MDR market is crowded with competition.

Indeed, dozens of security companies and investors have focused long-term and/or pivoted aggressively into the MDR market. The reason: The global MDR market is forecast to have a 16.4 percent compound annual growth rate (CAGR) from 2020 to 2024, with worldwide revenues expected to reach $1.9 billion by 2024,  Frost & Sullivan predicts.

Among the key MDR market developments that MSSP Alert has tracked so far in 2021:

MDR's Next Wave: XDR (eXtended Detection and Response)?

Still, all of that activity comes amid another potential market shift. Some MDR providers now emphasize more of an XDR security approach -- which provides a unified view of endpoint, network and cloud security, and more.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.