A service of

Endor Labs likely to seek more capital before eventual IPO, CEO says

Endor Labs, a technology startup focused on securing software supply chains, has at least two years’ worth of runway following its recent USD 25m seed round, co-founder and CEO Varun Badhwar told Mergermarket.

The Palo Alto, California-based company will likely raise private capital again, on its way to an eventual IPO, the CEO said.

The US government is now calling open-source software security a national security issue, Badhwar said. That push could make open-source software security “a top one, top two priority” for chief information security officers in every company over the next 12-24 months.

“Very rarely in my career of 16 years in cybersecurity have I seen government lead the way on cybersecurity initiatives,” he said.

That problem really came to light following the SolarWinds breach of late 2019 and early 2020, the CEO said, and the log4j incident of December 2021 shifted further government attention to it as “one of the most foundational challenges to the cybersecurity ecosystem today.”

The CEO explained 80% of code in modern applications is open-source and essentially borrowed by developers from all over the Internet. He analogized it to a complex food that didn’t list the ingredients. Attackers use that code as a way into enterprises, and enterprises have been caught off-guard, he said. Business pressure for developers to deliver applications faster has exacerbated the problem, he said.

The company, founded in late 2021, emerged from stealth on 10 October in announcing its USD 25m seed round from Lightspeed Venture Partners, Dell Technologies Capital, and Sierra Ventures. The capital raise also included CEOs and executives from Palo Alto Networks [NASDAQ:PANW], Zoom [NASDAQ:ZM], Snowflake [NYSE:SNOW], Zscaler [NASDAQ: ZS], Netskope, Rubrik, Databricks, Microsoft [NASDAQ:MSFT] and other startupsaccording to Badhwar and a press release. Endor Labs has 32 employees, he said.

This is Badhwar’s third company. He co-founded CipherCloud, which he left in 2015 to create and become CEO of RedLock. RedLock was acquired by Palo Alto Networks in October 2018 for approximately USD 173m. Badhwar stayed on until September 2021 running Palo Alto’s Prisma Cloud business — a new product line for Palo Alto that he said went from zero to USD 300m in annual recurring revenue in three years’ time.

“What I have learned is how to build businesses at a hyper scale,” he said.

He said Endor Labs has no plans to sell quickly as it sees a multibillion-dollar opportunity and a path to IPO ahead.

Endor Labs will be opportunistic about potential acquisitions, he said, pointing to “five or six” acquisitions made by Palo Alto Networks when he was leading the Prisma Cloud business. 

“Growth can come equally well if it's organic and inorganic,” he said.

He said Endor Labs’ culture is centered around “radical transparency” and always putting the customer’s wishes first. He also said Endor Labs has a “no-ego mindset.” 

“When we are looking for partners, when there's board members, investors or even employees, we're looking at folks that are grounded, that are humble, that are open-minded,” he said.

The CEO said the company aims to quickly expand go-to-market efforts to win market share. Endor Labs has been beta testing its product the past year with more than 100 clients, varying in size from about 200 employees to Fortune 500. The focus is mid-sized to large enterprises’ development teams in North America because “the bigger the engineering team, the more exponential this problem becomes.” Europe and the United Kingdom would follow next.

Snyk and Sonatype are the closest competitors, he said.

Endor Labs uses Gunderson as its legal counsel.