WatchGuard plans major investments after Vector Capital takes majority stake
Vector Capital takes a majority stake in cybersecurity provider WatchGuard Technologies, buys out another investor and promises to pour more funds into product development and the sale of WatchGuard’s security offerings.
The San Francisco-based private equity firm is currently a co-investor in WatchGuard with Francisco Partners and Investing PROFit Wisely (IPW). But WatchGuard said on Wednesday it had reached a definitive agreement with Vector Capital to make a “significant new investment” in the cybersecurity firm, acquiring Francisco Partners’ stakes and becoming a majority shareholder in the process.
Terms of the deal, which is expected to close by the end of the third quarter of this year, were not disclosed.
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While officials didn’t disclose WatchGuard’s revenue or how much additional funds Vector is investing in WatchGuard, the Seattle-based company said in a statement that Vector’s financial clout will help “further accelerate the company’s growth.” ‘enterprise’ and will enable continued investments in “critical areas including but not limited to cloud transformation, secure access service edge (SASE), extended detection and response (XDR), managed detection and response (MDR) and other innovations in security automation.
And, in an email interview with CRN, Prakash Panjwani, CEO of WatchGuard, made it clear that his company’s commitment to the channel would only increase under Vector’s majority ownership.
“As a 100% distribution company (in sales), we have very focused resources on channel support, from recruiting, onboarding, ongoing training and enablement, to generation leads for end users and ongoing customer support,” said Panjwani (pictured). “This focus on the channel is what has allowed us to grow rapidly. We will continue to add resources to support the channel and our rapid growth, which will occur as a result of this transaction.”
Panjwani added, “This new investment means even more platform innovation and continued investment in our partner support and activation mechanisms, while continuing to expand our service portfolio. All of this leads to a better experience and more revenue opportunities for our partners.
Along with internal investments in security products, Panjwani said the acquisitions will be part of WatchGuard’s strategy to expand its “unified security platform and scale capabilities.”
Executives from two of WatchGuard’s MSP partners were enthusiastic about Vector Capital‘s increased role in WatchGuard, saying the private equity firm appears to have a long-term commitment to improving and growing WatchGuard.
“I’m absolutely thrilled,” said Don Gulling, CEO of Verteks Consulting, a Florida-based MSP and WatchGuard partner. “I think it’s the right decision at the right time.”
WatchGuard offers excellent security products and channel programs. But it needed additional capital to develop and acquire innovative security products to add to its offerings, Gulling said.
He said he “hopes and expects” Vector’s investment will lead to a broader, more integrated security platform.
Calvin Engen, CTO of F12.net, a Canada-based MSP, said he was also excited about Vector Capital’s increased role in WatchGuard and plans to increase WatchGuard product offerings on a single platform.
“One of the many challenges in our industry is that it’s very fractured,” Engen said, noting the wide variety of vendors and security products currently presented to retail players. “This led to gaps in security coverage and frustrated MSPs.”
But now WatchGuard, with the backing of Vector Capital, has the ability to “deliver more holistic security products” that will make the cybersecurity industry less complex for MSPs and customers.
“MSPs are the future of security delivery, but to be successful they need a bespoke platform designed for their needs,” said Sandy Gill, managing director of Vector Capital, in a statement.
“WatchGuard is uniquely positioned to lead the market by enabling these MSPs to use its unified security platform. We are excited to further invest both organically and through acquisitions in the company’s mission to provide security-focused MSPs with a vendor, platform and vision on which to build their business.
Alex Slusky, founder, managing director and chief investment officer of Vector Capital, said in a statement that the company is “proud of the foundation of success we have built with the leadership team at WatchGuard and looks forward to fueling the next phase of growth and transformation”. for the company.”
WatchGuard’s Panjwani said the deal with Vector was a “big step” for his company. “It’s recognition of what we’ve already accomplished by focusing on becoming the security platform for MSPs.”