1Password has raised $125 million CAD ($100 million USD) in its latest round of financing, as the password manager startup looks to further scale its operations and move beyond passwords.
The financing was led by existing investor Accel and gives Toronto-based 1Password a $2.5 billion CAD ($2 billion USD) valuation, doubling the startup’s prior $1 billion USD valuation after its last raise.
“I think it’s a really special business and we have a lot of conviction that it’ll be worth a few more billions of dollars.”
1Password secured that financing in late 2019, pulling in $265 million CAD in what was the company’s first institutional capital. Founded in 2005, the company raised the money to scale and develop its go-to-market strategy.
“At the time [of our last round], we said, ‘hey we’re going to take that Series A, and the partnership with Accel, and, really, what I call, grow and grow,’” 1Password CEO Jeff Shiner said in an interview.
“We didn’t have go-to-market, we didn’t have marketing,” he added. “And so, in that last 18 months, that’s what we’ve really been focused on … maturing the company and our processes.”
1Password was already profitable without marketing, organically garnering 25 percent of the Fortune 100 companies as customers, spanning Canada, the United States, and Europe.
Accel partner Ethan Choi said he was “gobsmacked” in 2019 by 1Password’s numbers, which included 50,000 customers and over $50 million in annual recurring revenue (ARR).
“It’s like a perfect mix of bootstrapped and PLG [product-led-growth],” said Choi in an interview. “And where we could come in and help them [was] with a go-to-market side, as well as partnerships, and, probably most importantly, build up an executive team.”
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1Password did just that, spending the last 18 months focused on structured growth, building a go-to-market strategy, and attracting larger business customers. The startup also built out its executive team, pulling in leaders from Atlassian, Malwarebytes, Lightspeed, and Blue Cat.
The startup offers a password generator and manager that can be integrated into web browsers, allowing for easier login to websites, entering credit card information, and filling registration forms.
1Password’s easy-to-use, secure password software has also attracted the attention of notable investors and tech executives, alike. Ashton Kutcher’s Sound Ventures participated in the most recent round, alongside Skip Capital and a group of angel investors that include Shopify’s Tobi Lütke and Harley Finkelstein; Slack founder Stewart Butterfield; Anthony Caselana of Squarespace; as well as leaders from Atlassian, Eventbrite, Facebook, Google, and MessageBird.
“Having some of the technology greats … all of whom built tremendously successful companies … they can help us take 1Password to the next level,” said Shiner.
1Password’s angel investors are also some of its biggest customers, including Shopify and Slack. 1Password has grown from 50,000 customers in 2019 to 90,000 now, pulling in $120 million in ARR. The startup’s customers also include major names like IBM, Wealthsimple, PGA, Under Armour, Intercom, and GitLab.
With a track record of profitability, it was the Accel team that initiated 1Password’s recent fundraise. “I think it’s a really special business and we have a lot of conviction that it’ll be worth a few more billions of dollars,” Choi said about Accel’s desire to double-down on 1Password. “This could be a generational security software business.”
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With 24 active portfolio companies in the security space, Accel’s investment in 1Password is also notably one of the largest investments the firm has made in a security software company.
It is security more broadly that 1Password now has its sights set on. Already offering management of logins and credit cards, 1Password recently launched ‘Secrets Automation,’ which allows businesses to store company infrastructure “secrets,” like API tokens, applications keys, and private certificates. Shiner also pointed to helping companies with the IT onboarding and offboarding of employees as an area 1Password is exploring.
“Trying to keep track of which apps your employees use is becoming a real challenge,” said the CEO. “So, when they leave a company, [employers] don’t know which ones to revoke, and so that’s an area that we, in 1Password, are going to be able to help solve those challenges, in a very usable way.”
In another shift away from its organic growth, Shiner noted 1Password also has its eyes on building out mergers and acquisitions strategy.
“When I look at it, in terms of the round itself, strengthening our admittedly already strong bank account will just give us the additional financial freedom to continue our rapid growth of the company,” said Shiner.
Image courtesy 1Password.