Startup Hits $4.8B Valuation After Series E as It Disrupts VDI, Web Filtering Tools
An enterprise browser startup led by former Symantec President Mike Fey got $250 million to simplify IT infrastructure, enhance user experience and improve cybersecurity.
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Island will use the Series E investment to displace legacy tools including SASE platforms, VDI and traditional web filtering by offering deeper visibility, faster deployment and enhanced security natively through the browser, said Fey, Island’s co-founder and CEO. The Dallas-based company got a $4.8 billion valuation, 60% above the $3 billion market cap associated with Island’s $175 million Series D just 11 months ago.
“It’s very powerful for our customers to know that we’re going to have the war chest required to deliver on this massive platform,” Fey said. “We’ve been very fortunate. The first couple use cases we rolled out for have been received wildly successfully. But our customers are bringing us so many more opportunities to add value, and we want to be at the size and scale to seize that opportunity.”
Island employs nearly 700 people, and has raised $730 million since emerging from stealth in February 2022. The Series E funding round was led by Coatue Management, which will help position Island for a future IPO with public market operational discipline. Fey said Island’s Series E funding diluted existing shareholders by just 5%, suggesting financial prudence in parallel with growth ambition (see: Island Gets $175M Series D Funding, Doubles Valuation to $3B).
Does an IPO Lie in Island’s Future?
Fey said the Series E money will help Island to scale up its R&D and international growth aggressively while preparing for an IPO window should market conditions become favorable. The funding also helps Island support its international growth, hire top-tier engineering talent and sustain rapid innovation while keeping pace with customer demand, according to Fey.
“Coatue is an amazing organization, and becoming more strategic to them is good for Island,” Fey told Information Security Media Group. “Giving us the means to continue a global expansion was part of the reason to get the money. We want to grow R&D significantly. We want to grow our global footprint significantly. So, having a larger war chest to do that made sense.”
While market conditions matter, Fey said Island’s initial public offering readiness will be determined by internal factors such as predictable financial performance, scalable operations and systems maturity. He said Island is focused on creating the right internal foundation – from global financial systems to repeatable business processes – to ensure a successful public market transition when the time is right.
“We want to make sure we have got bulletproof predictability, that we’ve got scale, so that investors take it seriously and the right investors who want to be part of the journey,” Fey said. “And we also want to have the right systems in place. So, we’ve got to upgrade our financial systems. We have to get global coverage. These are things that, to be a great candidate for IPO, you want to have in place.”
Early skepticism about enterprise browsers being just for regulated industries is fading as major firms in finance, healthcare, retail and travel adopt Island as part of their modernization strategies, Fey said. The firm’s $4.8 billion valuation reflects strong demand and growing traction with both legacy and born-in-the-cloud organizations, including seven of the 10 largest financial institutions in the world, Fey said.
“We’ve reached a scale now that’s hard to ignore,” Fey said. “You could write off enterprise browser market before as, ‘Oh, this isn’t a big deal. It’s just for security companies or highly regulated environments.’ But now, at our size and scale, you can’t do that. And raising this valuation sends that message very clearly. This is happening. This is very real.”
From Displacing VDI to Displacing SASE, Web Filtering
Island plans to invest heavily in R&D to transform the browser into a centralized, enterprise-grade platform, eliminating layers of legacy IT infrastructure by building more functionality into the browser, Fey said. Customers are highly engaged in this process as design partners helping guide the roadmap, and Fey said rapid iteration is a key differentiator, with Island delivering new features within 21 days.
“We want to be in a scenario where the ability to support the future of work requires a browser and minimally, nothing else,” Fey said. “We want a doctor to be able to show up on that iPad and be able to deliver for their patients. We want that doctor be able to embrace AI but not have fear of compliance problems or access. We want the hospital systems to be able to be nimble and engage.”
Island is displacing SASE tools and web filtering platforms by offering deeper traffic inspections, superior control and lower overhead, Fey said. Unlike legacy SASE tools that inspect traffic after it’s encrypted and often backhaul it for analysis, Island sees traffic pre-encryption at the browser layer, enabling richer analysis and real-time enforcement. Fey said legacy SASE deployments are complex, expensive and slow.
“We see all traffic because we’re posted in pre-encryption, so we have the ability to deliver the same security controls, but divert the traffic where it needs to go, rather than impact the networks that these companies run on and incur the cost of adding bandwidth into these vendors,” Fey said. “While we collaborate and work with those environments, a lot of our customers want off them.”
Fey said he’s deeply focused on customer experience and retention since every customer Island has signed has installed the product, with the company not losing a single customer to date. Success is tied to customer satisfaction, new deployments and ongoing product adoption. The funding will help Island scale its engineering team to maintain its high-touch model even as the platform gets more complex.
“We’ve kept every customer we’ve engaged with, every customer has installed the product,” Fey said. “We’re very blessed, and we want to make sure that doesn’t change. The relationship we have with our customers is the best I’ve ever had in my career. Not only are they appreciative of what we’re doing, we’re very appreciative of them as well, but it feels like we stayed as design partners.”