The Israeli company intends to use the net proceeds from the offering to ramp up marketing and sales of its products in the United States and globally, including in the channel, as well as for research and development of new technologies to expand its business, and for working capital and general corporate purposes.
John Parmley, CEO of Safe-T North America, tells Channel Partners that going public means “we’ll have more financial resources and wherewithal to support an expansion of our channel program.”
“We can move forward in areas of recruitment, training and marketing activities (co-op, MDF, etc.),” he said. “Our experience in these areas leave us to believe that training and marketing will create more opportunities for channel partners as investments in infrastructure (marketing, training, etc.) create a domino effect in expanding revenue opportunities for our partners.”
Having Safe-T’s offerings interoperate with other security vendors allows partners to deliver a holistic solution to their customers that not only addresses real-life problems, but also allows partners to deliver a platform that gets the attention of enterprise executives and chief information security officers, Parmley said.
“Safe-T allows channel partners to go back to their existing customers and break into new markets, delivering a message that the channel partner is a trusted adviser to their customer and is committed to assisting the enterprise in solving problems through innovation,” he said. “Delivering innovation is a way for our channel partners to differentiate themselves and show value.”
Larry Walsh, CEO and chief analyst of The 2112 Group, and member of the Channel Partners Editorial Advisory Board, said the security market is hot. State-sponsored cyberattacks, high-profile breaches, increasing organized cybercrime, more potent hacking and attack tools, and a “slew of new government regulations” are driving up interest and investments in security technology and services,” he said.
“Security spending has increased steadily at a rate of 8.5 percent to 10 percent annually for the past five years and shows no signs of slowing down,” he said. “The global security market is expected to top $120 billion in 2019 and could reach $170 billion by 2023. All of this is drawing more companies and investors into the market. Investors like security because it’s a safe bet. Security companies that have demonstrated an ability to develop a solid revenue base are good candidates for initial public offerings (IPOs) and venture capital funding because they have a higher probability of producing strong returns on investment.”
And going public provides security companies with the capital they need to develop new products, resources that benefit partners and customers, and routes to market, Walsh said. However, going public isn’t the cure to growth challenges or a sign of success, he said.
“It’s a means of raising money and paying off early investors,” he said. “While public companies have access to capital, they also operate under the intense scrutiny of investors and government regulators. This is why there’s a debate over the wisdom of companies being public. This isn’t to say being public is a bad thing, but it does come with this luggage. And because Wall Street is most concerned with revenue and return on investment (ROI), public companies tend to make decisions that satisfy investors, and not necessarily partners and customers.”
In May, Safe-T launched a more comprehensive and formal partner program with the goal of expanding globally and recruiting new partners in key territories to meet growing demand for its services. The program is geared toward VARs, distributors and SIs.