Verkada Raises $80 Million, Triples Valuation To $1.6 Billion

By John Honovich, Published Jan 30, 2020, 09:09am EST (Info+)

Verkada's rocketing valuation continues. 9 months ago, they got a half-billion valuation and now they have announced more than triple that, at $1.6 billion, raising $80 million more.

The most amazing thing? Verkada's next big thing is physical access control. Not a joke.

While access control is generally looked at as slow and boring even within physical security, access control was the lead headline in Verkada's announcement.

Inside this note, we examine where Verkada is at, how this helps them, what risks they face going into access control and how this impacts the market.

Add *** ********* ** ****

*** **** ********* ******* ****** ** that ******* **** **** **** ** grow ********* **** *** ** *** in ****.

**** * ***** ***, ******* *** only ** *********, *** ********, ******* 10x+ ** ~***:

****** ******* *** ***** ** ** incredible ***** *** ***** ************. ** took ********, *** ******** ********** *****-**** startup, **** **** * ****** ** get **** **** ********* ******* ******* is ****** ** ******* **** ** half **** ****. *** **** $** million, **** **** *** *** ***** to ** ****.

******* ******* *** *** - *** salespeople, ****** **** ********* ***** ***** surveillance ************ ** ***** ******* **** Axis *** ********. **** *** ******* increase ** *** ********* *****, ******* may *** ***** ** **** *** Avigilon ***** ******** ******, ******* ***** companies ***** ** *** $*** ******* range ****** ***** *******.

** *** ******* ******* *** ****** away * *** ** **** ******** and ****** * *** ** **** calls ** ****, **** *** **** that ****.

Tripled ******* ****

******* ****** ******** ***** ******* (**** over ****) ***, *******, **** ** significantly **** **** **** ** ***** have ******** ***** ***** ********** ******** in *********** *** ********* ***** ** 2019.

**** *** ***** ***** **** **** selling ** *** ***** ***** **** been **** **** ***** *** ***** any ******* ****** **** **** *** massive ******** **** ** ********** ****.

**** ******** ******* ****** ***** ********** of *** *******, **** ***** ***** Verkada *** $*** ******* ** **** revenue, ***** ********* **** *** *** do (***** ** ***** ***** **** did $** ******* ** ****, ***** they ***** *** ****). ***** **** say **** ******* ******* ** ****, we ***** ****** ***** **** ******* was ** *** $** ** $** million *****, ***** ***** *** ***** valuation ** ** ********** *** ******* multiple.

**********, **** *** *** $** ******* and **** ** * **** *********** amount **** ** ******* *** ***** to **** ** *** ** *** physical ******** ******.

Access ******* ********

***************** ** ******** ****** *******, *********:

*************'* ***** ***** ******** *******'********** ** *** ** ******** ******** OS:

*** ******* **** **** ** **** Verkada ** *** ** ****** '****' a ***** ************ *******, **** *** bigger **** ****, **** *** ** the $** ****** ******* ******, ******, they **** ** "***** ********'* ******** OS." * ******* **** ***, ** even *** * **** ** ****, is ***** *** ****, ***** **** since ********* *** *** ******* **** at **** **** ** ****.

Plus ** ****** ******* *********

******* ********* ** ****** ******* ******* page*** ** *** ** **** ******* beyond *** ******* **** ** **** be ***** *** ********* **** ***** video:

*** ***** **** ********** ** ******** access ******* ***:

  • *** * *** ** ******* *********** - ***** *** ********* ***+ ***** surveillance ******** ** *** **** *** years, ***** ** **** * ******* in ******** ****** *******.
  • ***-***** / **** ********* - ******* access ******* ** * ******** ******** operation, ************* ****** ******, ** ** increases *********. ******, * ******** **** buys *******'* ***** *** ****** ******* will ****** ***** *****, ** **** because *** **** ** ********* *** the *** ******* ********* ***** ** prohibitive.
  • ******* *** * ***** ******* - If *** **** ***, ***, *** guys *** ******* *** *** ****, give **** **** ** ****. ****** has * ******* **** ****, ** take ********* ** **.

Negatives ** ****** ******* *********

*** ***** **** ********* ** ******* offering ****** ******* ***:

  • ****** ******* ******** **** ** *********** and **** ** ***** **-****. ******* can ***** *** *** ** *** video **** *** **** **** *** ditch ******* *** **** *** **** and ******** ******** *** ******** *** all *** ********** ****** **** ***** access *******. **** ******** *********** ********** on *** ******* ***********, ******* *** sales ***** ** *******.
  • ****** *** *** ****** ******* *** going ** ** *** **** ***** about **** ****** *** ********* *******. To ****, ******* *** *** ****** with ** ******** *** **** ***** surveillance ** * ******** **** ***** they **** ** ******** ***** *** support ***** ***** ***** **** ** sacrifice ***********. **** ****** *******, **** things ** *****, ** ***** ******* very ****** ******** *** *********. ** will ** *********** ** *** ** Verkada ** ***** *** ****.
  • *******'* ***** **** **** **** ******* access *******. ** **** ****** **** ******* a ***** ******* ***** **** *******. They *** **** **** ******, ********* and ***** ** ***** **********, ******* or *** **** ********** ****. **** is *** ***** ** **** ** well ** ****** *******, ***** ***** and ****** *** *******. *** *** knows. ***** ******* *********** **** ******** IT ******** ******* *** *** ******* *** *********.

Outlook - **** **** ******, ***** *******

******* ****** ** **** ** **** some ****** ******* *** ** **** be * ******** ** ***** ***** business *** **** **** *** **** pain **** *** *****. ***** ***** machine ** ****** *** ** ** sell * ******* **-**** ****, ** they ****** ******** **** *********. ****** that, ****** ******* ** * ***** for *********** *** ******* **** ***** it.

Video ***** ***** *** **** *************

**** ** ****** ******* ***** ** being *****, ******* ***** *** * chance ** ******* *** *********. **** clearly **** ***** * ***** ***** system ** ******* *** ****** ***** direct ** ** ********. *** *** they *** **** ** ****** *** question?

******* *** ***** ** ** **** high ** * ***-******** *****. *********-** ********** **** ********* **** ******* **** ongoing ****** ********. ** *** **** term, **** **** ******** ***********, ***********, cash **** **** ********* **** ****** value.

*** *** **** *** **** ** really *** ********?

*** **** *** ***** *** ***** to '**** *** ****** **' ** Verkada? **** **** ********** ** *** question.

*** ***, ******, ** *** *** to *** **** $** ******* ** funding, ******* *** ******** ******** *********, does **** *** **** ****.

Vote / ****

Comments (28)

Remote video was available in the days or dial up, but difficult and less functional. The advent of high speed internet changed that.

Access control is seeing the benefit of consumer style wireless locking devices. I can see them primarily selling battery operating locking hardware with a wireless interface and potentially network takeover modules for existing systems.

Agree: 3
Disagree
Informative
Unhelpful
Funny

If people are hacking electric and AI controlled cars, I think the biggest factor in their success regarding access control is going to be the actual definition of the word "Security"... Our industry has seen its share of exploits and world-record breaking DDoS attacks, so hopefully they're writing their own software and using some cutting edge encryption technology. It'll certainly be interesting to see how "cloud based" Access Control plays out.

My personal gut feeling based on nothing scientific is that anything cloud based is inherently vulnerable and for access control I'm not sure that the cloud buzzword is reassuring.

Agree: 2
Disagree: 1
Informative
Unhelpful: 2
Funny

Disagree? Unhelpful? Prove it. I dare anyone to say "this is unhackable" - watch an army of hackers emerge to prove you wrong.

Agree
Disagree
Informative
Unhelpful
Funny: 1

I think pricing will play a big role in how successful Verkada access is.

If Verkada chooses to price access low and trade some of that $80M to subsidize low pricing as others in security have done (i.e.: Hikvision & Chinese Govt funding) they may create demand for their access.

On the other hand, even the aforementioned Hikvision Access has not been a big success in the US, and (even with potential pricing advantages) the company's platform is not that much differentiated or less expensive than incumbent brands.

Agree: 2
Disagree
Informative: 3
Unhelpful
Funny

Differentiated. That’s a key indicator. It ties to “disruptive”.

HIK and others have tried being “cheaper” and garnered a small portion of the industry ignored by the big boys.

Some are trying Cloud, but without the sales team and marketing effort.

Simplysafe is disruptive to the traditional residential RMR model.

Verkada could be the right product, at the right time in technology with a hook and some serious money.

Am I a fan, not so much now, but they could fix the weaknesses when/if they want.

Agree
Disagree
Informative: 1
Unhelpful
Funny

but they could fix the weaknesses when/if they want.

what do you think Verkada could fix?

Agree
Disagree
Informative
Unhelpful
Funny

I think they could fix the “it’s a brick if you aren’t paying the license” by doing a freemium with maybe some advertising.

Except for their cloud storage option, there isn’t significant resources to map users to cameras.

Remove analytic features and all extras. Just live view, limited users and storage view from cameras. Maybe a 2 minute per clip maximum single download etc.

As for ACS, the controllers can store significant event history and function off-line except for global events in products like Mercury. Limit what can be done if not paying the cloud fee.

Agree
Disagree
Informative
Unhelpful
Funny

I had a project someone wanted us to bid today from Rently? Apparently the new thing is people to sell cloud / wireless access control remotely to multifamily and schools, act like this is something revolutionary and have no forward thinking of service, replacement, etc.

It's absolutely mind blowing. The best thing every integrator can probably do is invest a bunch of money in an applesque landing page and some marketing videos and go to town on a drip campaign. Sell a couple jobs and go find a VC fund to pay you 10x your revenue because you're revolutionary product vaporware churn and burn.

Agree
Disagree
Informative
Unhelpful: 1
Funny: 5

Rently

Rently looks like a very specific solution to showing properties for rent or sale; not a general access control system. Their 80-second overview video makes that clear:

Agree: 1
Disagree
Informative
Unhelpful
Funny

I think this is a decision that they will soon regret. Once they experience the pain we routinely live with related to door hardware, permitting, fire interfaces and testing, they will realize they've stepped off into the wrong end of the pool.

I also think that access control is too 'high touch' for the current sales model they have in place.

Just my .02

Greg

Agree: 9
Disagree: 1
Informative: 4
Unhelpful
Funny

I think this is a decision that they will soon regret

Same.

I see 3 outcomes:

(1) Verkada has figured something out no one else has in access control. And, from their perspective, they can say "These dinosaurs were wrong about us last time, they are wrong about us again."

(2) Verkada really underestimates how difficult access control will be, via arrogance or lack of experience and takes a big hit.

(3) Verkada does not actually care about access control that much but just wanted to have something to get tech people excited with for the new round who don't understand the actual issues in access control.

Agree: 5
Disagree
Informative
Unhelpful
Funny

I say it's a toss up between #2 & #3

Agree: 1
Disagree
Informative
Unhelpful
Funny

I disagree.

The cabling, and physical interfacing is not going to change much. Any system that has a reader and a lock needs to deal with the wiring - even Verkadas new system. I'll agree to that.

But when it comes to dealing with the software, I get the impression that some of the access control systems are still stuck in the 90's and I think Verkada (rightfully) sees an opportunity here.

When a (new) customer is faced with the choice of a clunky and outdated interface and a slick, smooth, 2020 looking UI that "just works" and has a tight and seamless integration with the video, my bet is that most users will pick the new kid on the block.

There are still a myriad of ways that Verkada can screw this up - but I don't think it will be due to access control being too difficult to manage.

Agree
Disagree
Informative: 2
Unhelpful: 2
Funny

Morten;

If you take a good look at the current market, there are plenty of options for updated software, both on-premise and cloud-based, with the look and feel and tight integration with video that you're talking about.

They're out there. Plus, there's lots of options now for battery-powered locksets that eliminate most of the wiring. These have risen to the point of replacing 'traditional' access control in a lot of situations.

Don't get me wrong; your point on software that looks stuck in the 90's is correct for many applications. And I totally agree that there are many opportunities for Verkada to screw this up!

Agree: 2
Disagree
Informative
Unhelpful
Funny

My point is this : Whatever physical solutions are available to the incumbents are available to Verkada too (locks, sensors, wired, battery powered etc.). I don't see how anyone is going to offer anything to move the scales materially in either direction.

In terms of the UX, I'll say this: My mom thinks I'm a handsome young man. The reality is that I am middle-aged, balding, eat too much and dress poorly.

Agree: 2
Disagree
Informative
Unhelpful: 1
Funny: 5

Technology is moving in their favor. As for installation, locksmiths would love it. Just do the hardware and let the IT guy do the rest.

My hotel room locks/unlocks with my phone as the temporary credential and our industry is pushing NFC and it’s a part of the lock.

Send a self contained NFC lock with a screwdriver to install and enroll like I did with a Schlage lock last weekend. Just like the camera they ship.

Who is going to create/sell a network POE transfer hinge first? Is there already one?

Network powered and controlled strike/mag lock? Full status reporting?

It’s coming anyway

Agree: 1
Disagree
Informative: 1
Unhelpful
Funny

PoE hinges have been around for a while.

McKinney ElectroLynx® Power over Ethernet Hinge (PoE Option) - ASSA ABLOY

Just don't mount a camera on the door itself.

Agree: 1
Disagree
Informative: 1
Unhelpful
Funny: 1

Morten, I do agree with you that lots of access control software is dated and Verkada has an opportunity to improve in that dimension against legacy players, but there are still lots of logistical problems that remain in access control that they cannot solve.

For example, the main advantage that Verkada has found for end users is the ease of setup, i.e., as they advertise, just plug into PoE and you are done. This is a critical component for their sales team, as it reduces friction and lets them ship off free trial cameras, etc.

What are they going to do on access control? They can ship out free trial controllers but they can't just plug that into PoE, they will need someone on-site to do the wiring to the readers, locking devices, etc. That means a longer sales cycle and more technical support.

I do think Verkada can make this a channel play, lead with video, then expand to access control but the logistical element makes this a much slower, tougher sales process, agree/disagree?

Agree: 2
Disagree
Informative
Unhelpful
Funny

but there are still lots of logistical problems that remain in access control that they cannot solve.

Agree, but the same applies to the incumbents, and I don't think you need to solve every single problem to be successful. If you can offer something that you believe - in totality - is better than the competition, then you really should launch the product. Naturally, there are plenty of other factors to consider - e.g. getting people to drop Milestone is hard. Not because Milestone is objectively better, but because they've been around. I suppose it's the same reason terrible politicians stay in office for way too long. It's extremely hard for people to admit they were wrong, so they'll sing the praise of their choice - regardless of the evidence, and once the evidence becomes too overwhelming, they'll just move the goalpost and keep cheering for the same old dog.

This is a critical component for their sales team, as it reduces friction and lets them ship off free trial cameras, etc. What are they going to do on access control?

I agree that they can't do the same shtick with access control. And I totally agree that the cameras are the Trojan horse. Once people are locked into Verkada on the camera side (and assuming they are happy with that situation), then it's probably quite simple for Verkada to up-sell an access control installation when the time comes. For demo-purposes I imagine they could send out a cheap reader and a few cards. Just to show how it works. The cost of an NFC reader is pretty low, I guess comparable to a camera.

That said, I can't help but wonder if they've seen some friction on the camera side, because there was (AFAIK) no access control integration to their VMS. With a closed system I guess it's very unlikely that a 3rd party was going to do an integration, so perhaps they simply have to add it to expand their reach.

Agree
Disagree
Informative
Unhelpful
Funny

If you can offer something that you believe - in totality - is better than the competition, then you really should launch the product.

Agreed. I am not saying Verkada should not offer access control at all. My point is that this is likely to work out best as a channel play (established company gets more dollars per account) than it will be some form of transformation or disruption of access control generally.

Once people are locked into Verkada on the camera side (and assuming they are happy with that situation), then it's probably quite simple for Verkada to up-sell an access control installation when the time comes.

Also, I agree. I do think that means Verkada's access business has an upside max of maybe 20% of their video business, fine incrementally but not something particularly strong to lead with on a funding announcement where one's valuation triples.

Agree
Disagree
Informative
Unhelpful
Funny

Well damn, I guess I'm going to need to up my swag game now....anyone have a contact at Yeti??

Agree
Disagree
Informative
Unhelpful
Funny: 12
Agree
Disagree: 2
Informative
Unhelpful: 5
Funny: 3

Anyone else hoping for a Yeti cooler for listening to a webinar?

In all seriousness, this is super interesting. I don't think there hasn't been this much venture capital put into a traditional security company ever? Ring and Nest both raised a lot cash but they both offered a more niche product.

How long before Verkada is acquired? I guess this $80m is 12-18 months of runway to implement their vision/roadmap. Verkada uses AWS as their cloud provider, so will we see 'Amazon announces $1.5b acquisition of Verkada' in 2021?

Agree
Disagree
Informative
Unhelpful
Funny: 2

guess this $80m is 12-18 months of runway to implement their vision/roadmap.

Or less :) depending on how they spend it. For example, if they get to 800 employees by the of the year, that is easily a $100 million burn rate on employees.

They might sell off in the near future but they could also try to raise again. If in 2021, they raised $150 million I would not be surprised. Not saying it is worth it or not, just that is common pattern on the Valley side.

Agree: 2
Disagree
Informative
Unhelpful
Funny

You might be right about a Series D.

An interesting note, it looks like their co-founder Hans Robertson covered a significant portion of the $15m, Series A, himself. I wonder how this affected equity and dilution.

Agree
Disagree
Informative
Unhelpful
Funny

I'm not sure if they'll do well, but I hear what Senator Everett Dirksen said many years ago - "A billion here, a billion there, pretty soon it adds up!"

Agree
Disagree
Informative
Unhelpful
Funny

Verkada has published a long interview about the fund raising with co-founder and nominal CEO Filip Kaliszan, worth reading.

Some key highlights:

We have about 60 engineers, over 50 of whom are software engineers. All of our differentiation is on the software side.

Verkada has 2x the number of salespeople than engineers, which is incredibly out of the ordinary for a real manufacturer. We spend a lot of time talking about Verkada's sales excesses and sales machine, this number underscores why.

Also, 60 employees to take on VMS, cameras, analytics, access control, etc., is very short-staffed. They are certainly going to expand engineering and they will need to.

More broadly, they emphasized a new theme and vision for Verkada, far broader than previously:

Our mission is to be the essential physical security software layer for every building, and the foundation of a larger enterprise IoT infrastructure.

Examples provided included:

We believe that the seamless integration of these different systems – access control, cameras, eventually other systems in buildings – in a single, secure software platform will be the ultimate differentiator for Verkada in the long run.

our vision gives us the flexibility to expand into many other areas. For example, Verkada might be protecting employees and customers by cleaning the air, warming the building, locking the door, or sounding an alarm when there’s smoke in the building. [emphasis added]

A giant closed building management system... The two main pluses are (1) for enterprises that want a turnkey offering, there will not be anything close to just locking oneself into Verkada. And (2) the long term lock-in is going to be incredible and the subsequent profits for Verkada will be unreal. As he acknowledges in the interview:

Verkada is exceptionally sticky. That’s due mainly to the nature of our system. With security infrastructure, there’s a significant upfront commitment from the customer: she has invested both in the hardware and the labor to physically install a system throughout her buildings.

Hey, Verkada might wind up with 3% of the revenue in the market but 90% of the profits...

Agree
Disagree
Informative: 1
Unhelpful
Funny

They may have some success with taking over existing systems but I do not see them being a player in new installations. In Texas they would need a physical office in the state that is licensed. Most new installations require permits which means having to submit plans and often test the system with the Fire Marshall. We are seeing more and more municipalities that require this in order to raise money via fees even when all of the electronic locks are free egress devices. There is also the matter of service. Most people can get by with a camera being out. Very few people will allow their building to be unlocked overnight. There is not a cookie cutter approach to access control. I have been doing it for over 32 years and still run into unique situations on a weekly basis. Also, there will always be a hardware component related to access control that will require an extensive infrastructure to support.

Agree
Disagree
Informative
Unhelpful
Funny
Login to read this IPVM report.
Why do I need to log in?
IPVM conducts reporting, tutorials and software funded by subscriber's payments enabling us to offer the most independent, accurate and in-depth information.
Loading Related Reports