SSE revolutionizing the market for SaaS security for remote and hybrid workers

The Security Service Edge (SSE)was introduced by Gartner in 2021as a part of the Secure Access Service Edge (SASE)architecture. SASE is where Software-Defined Wide Area Networking (SD-WAN), Cloud Access Security Broker (CASB), Firewall-as-a-Service (FWaaS), and Zero Trust Network Access (ZTNA) meet to create a single cloud-delivered service model. SASE is supposed to enhance security within the organization upon identity, security and compliance policies, and a real-time risk assessment.  SSE is a specific subset of SASE’s components, mainly within the security framework in terms of Cloud Secure Web Gateways (SWG), CASB, and ZTNA. SSE facilitates secure access to websites, SaaS applications, and other private applications, holding malicious participants outside of the enterprise network and sensitive data inside of the enterprise.

SaaS Security intends to guarantee user privacy and corporate data in subscription-based cloud applications such as SSE, which is primarily delivered as a cloud service, without including network-as-a-service in it. SSE is getting more attention as remote and hybrid work possibilities are getting more common and enterprises need to adapt to more mobile applications for their employees and end-users. Enterprises need to secure, consolidate, simplify, and guarantee access to their network.

There are several reasons why an enterprise should be considering using SSE in their organization: performance will increase and UX will be better for all employees, as with hybrid and remote working models, more applications are outside of the enterprise. Thus, the use of premise-based security services gets meaningless, as all dataflows are single-channeled increasing congestion and latency, which results in a worse UX and decreased performance. Additionally, business scalability will be higher, as the enterprises are prepared to change mandates, ingrate M&A faster, provide better service to third parties, update anytime the existing service, expand the reachability, increase accessibility, and be prepared for seasonal effects. Furthermore, security policies will be guaranteed for all involved parties. A SaaS security solution such as SSE will enhance the secure use of the network with the same security protocol for every endpoint. Moreover, IT personnel can be shifted to other tasks, rather than maintaining structures that can be replaced with SaaS services. Outsourcing these kinds of processes enables the enterprise to manage its policies remotely. Finally, the enterprise management will mitigate security weaknesses inside of the organization and are ready to monitor, alert, register, and report all events inside of the network.

Several companies have already been in the SSE business for some time, even though it was first labeled accordingly by Gartner in 2021.  Some of these companies are Cisco, McAfee, Forcepoint, Zscaler, Wedge Networks, Netskope, and Broadcom, among others.

The market is growing on the back of the exclusion of networking hardware for distributed services, as they would not be needed anymore, which allows SaaS providers to dominate the market. The compound annual growth rate (CAGR) between 2022 and 2025 is expected at 24.2% coming from a market size in 2022 of $5.3 billion to reach $10.2 billion in 2025, including only SWG, Cloud Security, and ZTNA. This is also observable in the M&A markets, where the number of transactions is increasing.  Several companies are rebranding to offer SSE, i.e., Skyhigh Networks which was acquired in 2018by McAfee for $400m and split in Q1 2022 by Symphony Technology Group -the private equity firm- to be rebranded as Skyhigh Security. Moreover, in Q1 2022, Todyl, a developer of a security cloud platform under the SASE architecture received $28 million of Series A funding from Anthos Capital among other investors to empower other SMEs to use its SSE service. Also, in Q1 2022, flexiWAN, a developer of an open-source SD-WAN and SASE architecture received an undisclosed amount to accelerate their development. Likewise, Zero Networks, a developer of network security tools received$20 million of Series A funding from Venrock and other investors in February 2022, as well as an undisclosed amount of funding from CyberArk Software in May 2022to fuel the development of SaaS Security services to expand their service offering. Additionally, Bitglass was acquired by Forcepoint for an undisclosed sum to replace their own SSE solution, which gives Forcepoint an impulse to replace their hardware appliances with cloud security services. Also in 2021, CipherCloud was acquired by Lookout for an undisclosed amount to add SSE to their service offering. Cato Networks, a developer of a SASE platform, raised $200 million from Lightspeed Venture Partners and other investors to further develop their SASE service offerings.

All these transactions not only support the existing market trend but also highlight the importance of SSE and SASE for an enterprise to safely comply with risk management and data management. There is a chance for all enterprises to develop SSE solutions and integrate them into their organization, as according to Gartner80% of enterprises will have adopted a SSE platform that unifies web, cloud services, and private applications by 2025.

Ralf Philipp Hofmann is an award-winning investment banker who has been active as an entrepreneur and technology investment banker promoting digital transformation for 25 years. Ralf supports great technology entrepreneurs in defining their growth strategy and structuring and executing value-creative M&A and fundraising transactions. As a Co-Founder and Board Member of Drake Star Partners, a global investment banking firm serving technology companies worldwide, it is his aspiration to connect Drake Star’s clients with the firm’s global network of entrepreneurs, high-growth technology companies, large international corporations, and leading investors.

Ralf has extensive experience in cross-border M&A, private equity transactions, growth equity, and debt transactions, IPOs, public secondary and PIPE transactions across Europe, the US, and Asia. Ralf is also one of the Co-Founders of LD&A Jupiter (one of Drake Star’s predecessors) and has led over 100 transactions during his career, some of his most notable transactions include the recapitalizations of ]init[ AG für digitale Kommunikation, the sale of Snapview to BSI, the recapitalization of Ingentis, the series of transactions for Avira, including the sale to InvestCorp and the acquisition of BullGuard, the sale of ProLeiT to Schneider Electric, the recapitalization of HYPE Innovation, the sale of Elgato Gaming to Corsair, the recapitalization of Cellular, the recapitalization of Acrolinx, the Unu fundraising led by ponooc, the Campanda fundraising led by Michelin, the sale of Smart Adserver for Axel Springer and aufeminin, the sale of Arcplan to Marlin Equity, the sale of New Moove to Fitness First, the sale of finanzen.net management shares to Axel Springer, the sale of Big Social Media to USU Software, the capital increase of Intershop and sale of shares to GSI Commerce, the sale of billiger.de for ProSieben.Sat1 to a consortium led by Müller Medien, the sale of dooyoo to LeGuide.com, the sale of ImmobilienScout24 to Deutsche Telekom, the IPO of P&I Personal & Informatik AG, the IPO of Evotec SE, and the sale of YMOS to Magna.

Prior to the formation of Drake Star Partners and LD&A Jupiter, Ralf was Managing Director and Head of Technology Investment Banking at the successor of SG Cowen Germany and Co-Founder and CFO of a B2B marketplace.

Ralf began his career in Global Investment Banking at Morgan Grenfell, Merrill Lynch, and Deutsche Bank in London and Frankfurt, focusing on cross-border M&A and Equity Capital Markets transactions.

Ralf holds a Diplom-Kaufmann from Eberhard-Karls-Universität Tübingen where he focused on capital markets theory and studied business & international accounting at Gothenburg University, School of Business, Economics and Law (ERASMUS scholarship) and stochastics at Stony Brook University, New York.

About Drake Star 

Drake Star is an award-winning global tech investment bank that has completed over 400 transactions since 2013. Drake Star team of over 100 senior professionals across offices in New York, London, Paris, Munich, San Francisco, Los Angeles, Berlin, Geneva, Dubai*, and Singapore* focuses on mergers & acquisitions and corporate finance services worldwide in Consumer & Retail Technology, Digital Media, FinTech, Mobility & Sustainability, Software/SaaS, Digital Services, and Industrial Tech sectors.

Drake Star is the marketing name for the global investment bank Drake Star Partners Limited and its subsidiaries and affiliates. In the USA, all securities are transacted through Drake Star Securities LLC. In the USA, Drake Star Securities LLC is regulated by FINRA and is a member of SIPC. Drake Star UK Limited (FRN 942020) is an appointed representative of Kession Capital Ltd (FRN582160) which is authorized and regulated by the Financial Conduct Authority. © 2016 Drake Star Partners Limited.

For more information, visit www.drakestar.com.

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