[Updated at 1:05 p.m. on 10/17/2017 to add comments from Duo CEO Dug Song; see below.] Ann Arbor, MI-based cybersecurity startup Duo Security today announced that it has closed on a Series D financing round valued at $70 million, bringing the company’s total valuation to $1.17 billion just seven years after its inception.
According to the Michigan Venture Capital Association, this is the largest round of funding and highest valuation of any venture-backed company in the Great Lake State’s history.
Duo CEO and Detroit/Ann Arbor Xconomist Dug Song says that the company has benefited from being headquartered in Southeast Michigan, and he’s grateful for that opportunity. “I hope this news does something to elevate the profile of the community and region,” he adds.
The Series D round was led by Palo Alto, CA’s Meritech Capital Partners and New York-based Lead Edge Capital. The round also included new investors Geodesic Capital and Index Ventures, as well as existing investors Redpoint Ventures and True Ventures. A new strategic partner, Bay Area cloud software company Workday, also participated in the round. Duo says it is now among the world’s most valuable software-as-a-service companies, having raised a total of $119 million in investment capital since 2010.
The news doesn’t stop there. In addition to achieving “unicorn” status—what Silicon Valley calls companies that are worth a billion dollars or more—Duo announced it has exceeded 10,000 customers worldwide, and will add Lorrie Norrington, former eBay president and current operating partner at Lead Edge Capital, to its board. In addition, Meritech co-founder Rob Ward will serve as Duo’s board observer.
Duo is best known for its suite of cloud-based software tools preventing cybersecurity breaches anchored around the concept of two-factor authentication. The company verifies a user’s identity via a second device or piece of information that only the user has, helping to prevent account takeover and other fraudulent access. Its customers include some of the world’s biggest tech companies, including Facebook, Etsy, Yelp, and Zillow.
In a statement, Song said he viewed cybersecurity as the “biggest geopolitical problem of our time.” Every presidential administration since George W. Bush has elevated the importance of cybersecurity, Song says, including the Trump administration. The Obama administration poured billions of dollars into the Cybersecurity National Action Plan, and Song says he’s pleased to see Trump’s team “doubling down” on that effort as hackers grow ever more sophisticated in their attacks.
“The national action plan calls for strong authentication, modern devices, and secure access, and that aligns pretty closely with what we do,” he notes. Song says Duo’s government and public sector customers have been steadily increasing.
The company’s Series D investors include VC firms that specialize in cracking international markets, and while Duo already has an office in London, further overseas expansion is a long-term goal.
“We don’t have immediate plans [to expand internationally], but we need the right partnerships to become a global company,” Song says. “It’s definitely part of the formula.”
Duo is looking forward to its partnership with Workday, which Song describes as a company similarly “born of the cloud and highly disruptive.” Duo will work with Workday on partnership integration, Song says. In September, Duo announced it is the only cloud security company to be integrated into Microsoft’s Azure Active Directory platform, a cloud-based directory and identity management service.
“We’re very excited to create new ecosystems instead of using old, legacy solutions,” Song says.
Duo’s standing within the industry has also been on the rise, and Song would like to continue that leadership. Not long ago, Alex Stamos, Facebook’s chief security officer, tweeted that the “best product I use is [Duo Security].” What drives Duo, Song adds, is doing the right thing and maintaining the best relationships possible with the cybersecurity sector as well as the surrounding Ann Arbor community.
“There is a growing number of our customers really championing us, and we’re grateful,” Song says. “We focus on supporting our customers’ growth and success. If they’re successful, we are too.”
