Cybersecurity Startup Safe-T Files for $10M IPO, Looks At Channel For Growth

Safe-T Group on Thursday filed to raise up to $10 million in an initial public offering and disclosed that channel partners account for 35 percent of the company's revenue.

The Herzliya, Israel-based software-defined access provider said that it has 15 active distributors and has agreements in place to distribute Safe-T's product everywhere from Israel, the United States and Mexico to the Philippines, the United Kingdom, and Switzerland.

"We work with our channel partners to secure prospects, convert prospects to customers, and pursue follow-on sales opportunities," Safe-T said in a 111-page regulatory filing Thursday with the U.S. Securities and Exchange Commission. "We expect that channel partners will represent a substantial portion of our revenues for the foreseeable future."

[RELATED: Cybersecurity Firm Tenable Files For $100M IPO, Reveals Strength Of Channel Operations]

Safe-T said it supports the company's channel partner sales through a direct sales team consisting of both field and inside sales personnel. The company said it plans to increase its sales and marketing investment internationally, though it cautions that newly hired staff will need months to establish prospect relationships and drive overall sales productivity.

The company's primary competitors in the software-defined perimeter and application access market include Vidder, CryptZone, Akamai and Zscaler, according to Safe-T's filing, while its top adversaries in the secure data vaults and exchange space include CyberArk, Accellion and Varonis. Safe-T did not respond to a request for additional comment by press time.

Safe-T took in $5 million from one round of 2013 venture funding from Kibbutz Sasa, according to CrunchBase. The company employs eight senior managers, 25 full-time staff, three part-time staff, and several consultants, most of whom are located in Israel. Safe-T also has eight U.S.-based employees and consultants, as well as six European-based employees and consultants.

The company said in the its F-1 filing that it plans to use the net proceeds from the IPO to scale up product marketing and sales both in the United States as well as in the rest of the world. These activities will include brand creation and enhancing Safe-T's dedicated marketing and sales activities in the U.S.

Safe-T additionally plans to set money aside for research and development of new technologies to expand the company's business, as well as for working capital and general corporate purposes. Safe-T has applied to list its American Depositary Shares - shares of a foreign-based company available for purchase on an American stock exchange - on the Nasdaq Capital Market under the symbol ’SFET.’

Safe-T is small but growing, according to its regulatory filing, with sales jumping to $1.1 million in 2017, up 30 percent from $843,000 the year prior. The company's net loss improved to $5.3 million in 2017, 59.5 percent better than the $8.9 million net loss recorded in 2016.

Co-Founder and Board Chairman Amir Mizhar owns a 17 percent stake in Safe-T, making him the largest shareholder. Other significant shareholders include: Sasa Holdings – Agricultural Cooperative Society, with a 11 percent stake; MMCAP International with a 10.9 percent holding; and Ayalim Mutual Funds with a 10.2 percent stake.

Safe-T is the fifth cybersecurity vendor looking to go public this year, with rising cloud security star Zscaler raising $192 million in a Nasdaq public offering in March and next-generation endpoint security vendor Carbon Black hauling in $152 billion in a Nasdaq public offering in May.

Endpoint security vendor Avast, meanwhile, raised $194.7 million in gross primary proceeds from the IPO on the London Stock Exchange in May. And just last week, security and cyber risk vendor Tenable filed to raise up to $100 million in a Nasdaq IPO.