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Password management platform 1Password has raised $100 million in an Accel-led round of funding at a $2 billion valuation.
The raise comes hot on the heels of a slew of product announcements from the Canadian company, including its expansion into secrets management to help enterprises secure their infrastructure; a new API that enables security teams to funnel 1Password sign-in data directly into cybersecurity tools such as Splunk; and a new Linux desktop app aimed at DevOps teams.
The ultimate problem that 1Password is setting out solve is that the vast majority of data breaches are due to compromised passwords. 1Password targets businesses like Slack, IBM, and GitLab with a platform that allows users to store passwords securely and log into myriad online services with a single click. It can also be used to store other private documents, such as software licenses and credit card details.
The Toronto-based company raised its first ever round of funding in its then 14-year history back in 2019, when it secured $200 million from Accel, Slack (via Slack Fund), and Atlassian’s founders, among other angel investors. In the nearly two years since, the company said it has almost doubled its number of paying business customers to 90,000, and hit $120 million in annual recurring revenue (ARR).
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According to 1Password CEO Jeff Shiner, while multiple factors have aligned to drive demand for password management tools, the single biggest change since its last fundraise has been society’s rapid transition from offices to remote or hybrid working.
“Businesses — both large and small — were forced overnight to adopt a remote way of working,” Shiner told VentureBeat. “That switch meant that companies, most of whom were used to a centralized office, suddenly needed to support employees using their own devices, at home on their own potentially insecure networks. With the remote-hybrid shift came a proliferation of SaaS tools to help keep people and teams productive. Many of these tools are brought in to help specific teams solve specific problems, which means that across an organization, there can be hundreds of different software products — all requiring unique logins and access.”
Helping workers stay on top of all their login credentials is where 1Password comes into play.
The password problem
Numerous companies are tackling the so-called “password problem” by trying to remove the password from the equation altogether, leveraging “magic links” that are sent by email or biometric smarts. Decentralized passwordless authentication platform Magic announced a $27 million raise just last week, which followed shortly after Transmit Security raised $543 million at a hefty $2.3 billion valuation and Beyond Identity locked down $75 million. Elsewhere, two juggernauts from the identity and access management (IAM) sphere joined forces in May when Okta acquired Auth0 for an eye-popping $6.5 billion.
1Password, for its part, has also embraced various forms of passwordless authentication, including integrating with Apple’s Touch ID and Face ID to enable users to unlock 1Password using their fingerprint or face, as well as support for 2FA hardware keys such as Yubikey. Shiner also hinted at some possible new products that relate to passwordless authentication that he expects to launch in the coming months.
“We are closely watching the passwordless space and how it matures over the coming years, but whatever the future holds we will be there to support our customers in the most secure and private manner possible,” he said.
However, Shiner noted that some challenges remain if a truly passwordless future is realized.
“As an example, biometrics are ideal for authentication in many situations, as they literally convey your unique physical presence,” Shiner said. “But using biometrics widely opens up the question of what happens if data about, say, your fingerprints or face is stolen and can be manipulated by attackers to impersonate you. And while you can change your password on a whim, your face, fingerprint, voice, or heartbeat are much, much harder to swap out.”
Looking for ‘partners’
Shiner said that while his company is still very much profitable and wasn’t actively looking for new investment, the opportunity to bring on board myriad new investors — which he refers to as “partners” — from across industry was too good to turn down. Indeed, for its latest fundraise, a slew of new institutional and angel investors entered the fray, including Ashton Kutcher’s Sound Ventures, Kim Jackson’s Skip Capital, Slack cofounder and CEO Stewart Butterfield, Shopify CEO Tobias Lutke, Squarespace CEO Anthony Caselana, and Eventbrite cofounder Kevin Hartz.
It’s clear from its recent product launches that the company hasn’t been resting on its laurels, and its latest cash injection will go some way toward ensuring it continues on a trajectory to garner a bigger share of the $1.3 billion password management market. And with a stellar lineup of angel investors on board — people who have built major technology businesses themselves — he’s in good company.
“We have a lot happening with our product, and will continue to push forward with new features and applications that serve our customers,” Shiner said. “The partnerships with the technology leaders in this round is an aspect we are really looking forward to — these individuals have taken companies that started just like 1Password, and have shaped them into the household names they are today.”
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