Managed Security Firm Arctic Wolf Closes $200M Round, Moves HQ From Calif.

‘At our core, the way we go to market is to acknowledge that security has an effectiveness problem. There are lots of new security tools, but the number of security issues continues to grow. We say, it’s not a tool problem, it’s an operations problem,’ says Nick Schneider, Arctic Wolf’s chief revenue officer.

Security operations technology developer Arctic Wolf on Thursday said it has closed a new $200-million funding round that values the company at $1.3 billion. With the new round, total funding in Arctic Wolf stands at $348 million.

Arctic Wolf also unveiled the move of its corporate headquarters from California to Eden Prairie, Minn., to take advantage of the skilled workforce in the Minneapolis-St. Paul area.

Arctic Wolf is not a typical security company, said Nick Schneider, the company’s chief revenue officer.

[Related: Cybersecurity Week 2020]

“At our core, the way we go to market is to acknowledge that security has an effectiveness problem,” Schneider told CRN. “There are lots of new security tools, but the number of security issues continues to grow. We say, it’s not a tool problem, it’s an operations problem.”

Arctic Wolf provides managed detection and response via its cloud-native Arctic Wolf Platform. That platform centralizes data and telemetry into the company’s own cloud-native platform to enable 24x7 monitoring and provide on-demand access to security professionals, Schneider said.

“Our delivery model is concierge security combined with a cloud-native technology platform,” he said.

Arctic Wolf works exclusively through indirect channel partners, he said.

The new round of funding, which like previous rounds includes no strategic investments, will be used to expand growth and acquire new channel partners and new technology, and to build a stronger international presence, Schneider said.

Part of that founding could be used to make acquisitions, although Schneider said there are no deals in mind now. Prior to this, Arctic Wolf has made only one acquisition, that of vulnerability assessment startup RootSecure in late 2018.

Prior to this new funding round, Arctic Wolf in March closed its D round for $60 million.

Schneider said the company for now is very well capitalized, and that the route to a potential IPO is possible.

“But that’s not set in stone,” he said. “Given how well capitalized we will be with this round, our focus is on expanding.”

Arctic Wolf was previously headquartered in Sunnyvale, Calif., but made the decision to move its headquarters to Eden Prairie, Minn., in the southwestern area of the Minneapolis-St. Paul metropolitan area, where it already had a large presence.

“The move from California to Minneapolis-St. Paul gives us continued access to the skilled workforce in Minnesota,” Schneider said. “The new headquarters is also more central to our customers. And the business environment, specifically the talent pool, in Minneapolis-St. Paul is more favorable than in California.”

The new $200-million funding round means that Winslow Technology Group bet on the right horse a couple years ago, said Scott Winslow, president of the Boston-based solution provider and Arctic Wolf channel partner.

“Our take can be expressed in four words: next great security company,” Winslow told CRN.

Winslow Technology Group, which was recognized as Arctic Wolf’s Channel Partner of the Year in 2019 and 2020, realized in 2017 that it needed a cybersecurity practice. However, Winslow said, when his company held its first Customer Advisory Board in October of 2019, it realized that cybersecurity is the top concern of its clients.

“It became clear as day that we needed to put cybersecurity in the forefront,” he said. “We saw this as an area of great opportunity for us. And we confirmed it again with this week’s customer advisory board meeting.”

With the funding, Winslow expects Arctic Wolf to hire a lot more people for its sales, engineering, and security operations center, with a focus on high-caliber people.

“The problem in security is not the tools, but the people,” he said. “Arctic Wolf’s concierge security is important, and becomes an extension of our customer’s security team. Security people are hard to keep. They move around all the time, each time with a 20-percent bump in salary.”