Eyeing big market opportunity, LockPath closes $6 million Series B
For LockPath, an Overland Park, Kan. company that makes governance, risk and compliance (GRC) software, the funding follows closely on the heels of a $2 million Series A round completed last June and brings total capital raised to date to $9 million. El Dorado, based in Menlo Park, Calif., also led the company's Series A round. WIN led LockPath's April 2010 seed round, which also included investment from Ron Conway's SV Angel fund.
LockPath will use the latest funding to fuel the development of its flagship Keylight platform. The capital will also support aggressive recruiting and hiring and the continued growth of the company’s channel sales program.
A LockPath spokeswoman said the company's revenues have quadrupled since its last round of funding, and and CEO Chris Caldwell said in a phone interview that the company is on pace to "blow away" its projected numbers for 2012. Caldwell said the funding isn't a necessity, but he believes the time is right for LockPath to aggressively ramp up its growth.
"We're growing like crazy," he said. "We're also innovating like crazy.
"When we started looking at some of our market opportunities, things that we were doing with our channel, we have a pretty big release coming out in the fall with some really cool things that no one else is doing, and we just thought now is a great time to take advantage of our market opportunity and really bulk up."
The company's performance over the last year was enough to convince El Dorado to lead another round.
"Since our last investment in LockPath, the company has taken its position as an emerging GRC player to the next level and proven its strategic value as a GRC visionary," El Dorado general partner Jeff Hinck (left) said in a release. "Like many of our portfolio companies, LockPath is a key market disruptor, and its impressive growth in the last year demonstrates that the company is primed to dominate in 2012 and beyond."
Caldwell said the experience of working with El Dorado since the firm led LockPath's Series A round helped pave the way for the Series B investment. Caldwell said El Dorado's knowledge of GRC was a plus, as was the firm's willingness to let LockPath keep its headquarters in the Kansas City area.
"They really got enterprise software, and they understood security," Caldwell said. "And what they also appreciated was that, you know, Kansas City is a great security town. So they knew that there's a lot of great companies here, there's a lot of great security talent here, so it was one of those things where they saw the benefits right away.
"They understood the value and the asset of us being in Kansas City."
Founded in 2009 by Caldwell and Chris Goodwin, LockPath has called the Kansas City area home from the start. The company was born out of Caldwell and Goodwin's experiences working for a company that made software for the health care industry.
"Working with a lot of the health care companies, we started seeing their huge paint points around credit card handling and privacy and HIPPA data and just not being equipped or staffed to properly address those things," Caldwell said. "That was really what got us thinking about, 'How do we solve these problems?' "
"What they also appreciated was that, you know, Kansas City is a great security town. So they knew that there’s a lot of great companies here, there's a lot of great security talent here." - Chris Caldwell, LockPath CEO
LockPath now has 26 employees, including 20 in the Kansas City area, working to do just that. With the capital infusion, Caldwell said LockPath's workforce could double within a month and a half. That's growth Caldwell hopes will help LockPath better deliver on its mission of providing software to meet the needs of companies ranging in size from 50 employees up to Fortune 500 firms.
"We felt that a GRC platform should be accessible to any size company, and, you know, that was previously not a thought with a lot of other GRC software companies." Caldwell said. "They really focused on the Fortune 500, Fortune 1,000.
"We have a 50-person small company that falls within a regulated space that's successfully using our product. We also have companies that are 150,000 in size successfully using our product. The goal of making an accessible GRC platform that was easy to use but highly scalable is very difficult to do."
Credits: Photo of Hinck from eldorado.com.