Cato Networks secures $359 million in latest funding round

Israel’s Cato Networks said on Monday it had raised $359 million in a funding round, valuing the cybersecurity firm at more than $4.8 billion, as investors bet on growing demand for artificial intelligence-driven security and networking solutions.

An uptick in sophisticated cyberattacks has prompted fears of operational disruptions among companies and an increase in investor interest in AI-powered cybersecurity providers.

The funding was led by Vitruvian Partners and ION Crossover Partners, along with existing investors Lightspeed Venture Partners and Acrew Capital, among others. The latest round brings Cato’s total funding to more than $1 billion.

“With analysts projecting information-security outlays to climb at a double-digit clip through 2028, investors continue to treat cybersecurity and zero-trust plumbing as ‘can’t-cut’ line items even as other tech niches cool,” said Michael Ashley Schulman, chief investment officer at Running Point Capital.

Cato Networks plans to use the new funds to enhance its AI-driven security capabilities, increase investment in research and development, and expand its global footprint.

“Hefty private cash for Cato is less a one-off jackpot than a barometer that big-ticket appetite for cybersecurity is still running hot and that an exit wave through IPO, active secondaries, or acquisition may be warming up behind it,” Schulman said.

Reuters had reported last year, citing sources, that the company was gearing up for a potential 2025 IPO.

Cato, founded in 2015 by Shlomo Kramer and Gur Shatz, combines network services and security into a single cloud platform known as secure access service edge (SASE).

Its SASE solution helps businesses prevent threats, protect data, and quickly respond to incidents.

The SASE market is projected to surge to $25 billion by 2027, from $7 billion in 2022, according to Gartner’s 2023 report.

Customers listed on the company’s website include Swissport, Carlsberg, Element Solutions, and Komax.

—By Prakhar Srivastava and Steven Scheer, Reuters