The Smokescreen acquisition and India’s long wait for a cybersecurity unicorn
For most businesses, the Covid-19 pandemic was a body blow. For cybersecurity startups, however, it presented an unprecedented opportunity. As companies switched to remote work, their cybersecurity vulnerabilities were hopelessly exposed. With many employees connecting to their office IT systems via their personal unsecured devices and networks, they become easy marks for bad actors. Hacks and data leaks soon became commonplace, forcing companies to finally open their wallets for better cybersecurity solutions.
For
deception tech
deception tech
Deception tech
Deception tech works by guiding hackers to decoy servers and systems, triggering an alarm in the process
startup Smokescreen, it was a turning point. Once the pandemic hit, the bootstrapped company quickly migrated its software-cum-hardware solution to the cloud. It also refocussed its sales efforts, primarily targeting offshore markets. The change in tack bore fruit almost in real time. By the end of 2020, the Mumbai-based cybersecurity firm saw its annual revenue double to ~$3 million, according to an executive close to Smokescreen.
So impressive was Smokescreen’s uptick in fortunes that it found itself on the radar of large foreign cybersecurity companies. In mid-2021, this culminated in the previously invisible Smokescreen being acquired outright by Zscaler, a Nasdaq-listed cybersecurity behemoth that boasts annual revenues of $673 million.
In a conversation with The Ken, Smokescreen co-founder Sahir Hidayatullah neither disclosed the company’s revenue at the time of acquisition nor the deal value. Sources in the know, however, believe the deal valued Smokescreen at $40-45 million.
Even at the upper end of that estimate, the deal was too small to make headlines. Unlike sectors such as logistics and services, which have seen their fair share of unicorns, India’s cybersecurity sector is a long way from birthing its first unicorn. (While it may be tempting to count
Druva
Druva
The Ken
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, which was started in Pune, as India’s first, the company shifted base to the US as far back as 2012.) Indeed, Smokescreen’s acquisition by Zscaler represents almost a best-case scenario for the sector’s many players.
“The end game is not an
IPO
IPO
IPO
An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance. An IPO allows a company to raise capital from public investors
, but to build a profitable company, and make money for not just us but also employees,” said the co-founder of a Mumbai-based cyber security startup with less than $5 million revenue.
Gloss