As Network Security has maintained its prevalence in enterprise priorities, new challenges have emerged or risen to prominence. Insider Threats, Infrastructure Complexity, Interoperability, Identity & Access Management, and Cloud Visibility are just some of the top obstacles to providing secure network access. Companies are rapidly emerging to solve these challenges. According to Crunchbase, Network Security has seen over $9B raised across more than 550 deals since 2018, with an average Seed round raising $1.8M on an $8.1M pre-money valuation.
Security as a Service, a roughly $15 billion market, is now on a convergence course with Network as a Service, a $5 billion market, to create a new industry sector: Secure Access Edge Service (SASE). Throughout the digital age, each advancement in networking technology simultaneously enabled enterprises to reap myriad benefits while introducing untold risks. SASE overcomes that challenge by delivering networking capabilities and network security as a single, cloud-delivered solution that ensures users and devices have secure cloud access to applications, data and services regardless of location. SASE combines products and services, such as SD-WAN, Network Security, Cloud Access Security Brokers, WAN Optimization, Zero Trust Networks and more to deliver multiple capabilities through a simplified platform.
As of year-end 2018, only 1% of enterprises had explicit SASE strategies, but that number is expected to jump to 40% by 2024, according to Gartner. Driving that growth is a rapid shift to cloud adoption and an evolving security perimeter. As the future of work quickly approaches, enterprise user behavior and endpoint protection have both evolved. Users are no longer accessing sensitive information from a dedicated station within a pre-defined enterprise perimeter. Instead, users access data from diverse locations, such as at the office, in the air, from hotels, and at home, as well as from a multitude of devices such as desktop stations, laptops, tablets and mobile devices. Compounding this complexity is the rise of Bring-Your-Own-Device, where users now access enterprise systems through personal devices not natively part of the enterprise infrastructure. The result has been a complex web of challenges and solutions.
Incumbent players such as Palo Alto Networks, Microsoft, McAfee, Cisco, Zscaler, Fortinent, Forcepoint and more have taken steps to launch initial SASE solutions in 2019 and early 2020. However, each of these solutions lacks a complete suite of true Secure Access Edge capabilities. As a result, these companies will look to early stage startups providing innovative solutions and complements to existing technologies to build out robust product offerings. Fusion Fund expects a healthy M&A market for SASE products over the next 3–5 years. This expectation has been bolstered by the impacts of COVID-19 and rapid adoption (necessity) of working from home.
Enterprises yearn for simple, scalable and secure solutions. To facilitate these requirements, providers will need numerous Points of Presence to shift content inspection from within the network perimeter to the location of consumption by device and user in a low-latency environment. This evolution will be a key part of any enterprise’s digital transformation initiative, edge computing strategy, and workforce mobility plan. Fusion Fund is actively building relationships with founders, investors and ecosystem partners in the Secure Access Service Edge and greater Network Security space.