Password management platform 1Password aims to continue its strong growth with businesses in 2022 through its new $620 million series C funding round, which will help the company to go even deeper around meeting security needs for B2B customers, CEO Jeff Shiner told VentureBeat. In connection with the funding, 1Password has more than tripled its previously disclosed valuation to $6.8 billion.
While 1Password’s original focus area—offering a password manager to consumers—continues to thrive, the company’s offering for businesses now accounts for 60% of its revenue, Shiner said. The 1Password Business offering debuted in 2016, and in addition to securely storing employee passwords, the platform provides businesses with insights around key security challenges and integrations with other security tools.
The B2B offering generated revenue growth of more than 70% during 2020 and 2021 combined, and 1Password now has more than 100,000 business customers in total, up from 40,000 at the start of 2020, according to the company. Annual recurring revenue for 1Password exceeded $150 million as of the end of 2021, and business customers include IBM, Slack, GitLab, and Snowflake.
Businesses now “recognize the need to protect their people—and that only through protecting their people, will they protect their business,” Shiner said. “I think that’s the No. 1 reason why we continue to grow and scale as we do.”
Along with integrating with single sign-on (SSO) and multi-factor authentication (MFA) tools, 1Password can also feed data on security-related events—such as failed log-in attempts—into security information and event management (SIEM) tools such as Splunk. That capability was launched last July.
Other challenges that 1Password assists businesses with include enabling better security hygiene and a greater understanding of potential threats—for instance, from a former employee who still has access to a company’s systems.
Looking ahead, 1Password plans to help businesses to tackle shadow IT—i.e., the use of applications by employees for work without the knowledge of the IT department. This will include providing aggregated data to customers about what apps are being adopted by employees, according to the company.
Shadow IT is “a real challenge, because it’s next to impossible to capture [this information] at the infrastructure layer,” Shiner said. “That’s one of the most-requested capabilities that we’ll be adding.”
Toronto-based 1Password was founded in 2005, and the original focus on providing easier-to-use password management for consumers has been critical to helping the company to succeed with B2B customers, he said.
“If you can’t get your tool used by the actual people you’re trying to protect, it’s not going to be a useful tool,” Shiner said. “Our consumer background has helped tremendously in that.”
The series C round was led by Iconiq Growth and included funding from Tiger Global, Lightspeed Venture Partners, and Backbone Angels—as well as from Accel, which had led the company’s previous two rounds.
Numerous individual investors also took part in the round. Those include business executives such as LinkedIn executive chairman Jeff Weiner, General Motors CEO Mary Barra, CrowdStrike CEO George Kurtz, and Robert Iger, formerly the CEO of The Walt Disney Company.
Celebrities that participated as investors in the round included Scarlett Johansson, Matthew McConaughey, Ryan Reynolds, Robert Downey Jr., Chris Evans, Ashton Kutcher, Trevor Noah, Justin Timberlake, Pharrell Williams, and Rita Wilson.
The funding will go toward continued development of 1Password’s product offerings and support for further growth in the market, including through channel partners. The company recently launched its 1Password Partner Program with the aim of working more closely with indirect IT partners, who can include the 1Password platform as part of a broader security offering for end customers, Shiner said.
The latest funding round will also enable 1Password to continue its aggressive pace of hiring, he said. The company now employs 570 people—up from 177 at the beginning of 2020—and aspires to double its headcount in 2022, according to Shiner.
In addition, 1Password is looking to make strategic acquisitions this year using the new funding, he said. In 2021, the company acquired secrets management platform SecretHub.
Yet another use for the funding, Shiner said, will be to enable 1Password to make “big bets” in areas such as universal sign-on. The idea there is to help users to sign on “regardless of what the authentication is beneath the covers—whether that authentication is username and password, whether the authentication is an SSO, whether it’s a passwordless authentication through WebAuthn,” he said.
To date, 1Password has raised a total of $920 million in funding. The company’s new valuation with its series C round is a major leap from its prior valuation, of $2 billion, which was achieved in July in connection with its $100 million round.
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