Chainguard Raises $140M to Drive AI Support, Global Growth – Source: www.databreachtoday.com

3rd Party Risk Management
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Application Security
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Artificial Intelligence & Machine Learning

Company Seeks to Expand Globally and Grow Its US Public Sector Presence

Michael Novinson (MichaelNovinson) •
July 25, 2024    

A supply chain security startup led by an ex-Google Cloud engineer closed a Series C round to support AI workloads and expand its open-source software catalog.

See Also: Close the Gapz in Your Security Strategy

Kirkland, Washington-based Chainguard raised $140 million just eight months after completing a $61 million Series B funding round, tripling its valuation to $1.12 billion in the process. Co-founder and CEO Dan Lorenc said the company has seen increased demand for its services and a strong performance in recent quarters, with a focus on automation and the development of a comprehensive software factory.

Chainguard, founded in 2021, employs 152 people and has raised $256 million across four rounds of outside funding. Prior to founding Chainguard, Lorenc spent nearly nine years working on the infrastructure behind the Google Cloud platform. The firm brought in ex-Okta and Wiz Chief Marketing Officer Ryan Carlson to spearhead sales, marketing and customer success as Chainguard’s president.

Chainguard is also set to enhance its sales and marketing efforts, with plans to expand internationally in Europe and grow its presence in the U.S. public sector. The company aims to leverage this funding to maintain its momentum and continue delivering high-performance, secure solutions to its customers. The latest round of funding was led by Redpoint Ventures, Lightspeed Venture Partners and JVP (see: Chainguard Raises $61M to Protect More Open-Source Software).

“Building up those relationships lets you know who you’re going to work with long-term and lets you avoid any surprises later on,” Lorenc said.

What Makes AI Workloads So Pernicious

Lorenc attributed the company’s success to product-market fit, product readiness and positive customer feedback, creating a flywheel effect where satisfied customers recommend the product to others and increased use leads to more improvements and recommendations. The $140 million will fuel plans for aggressive hiring and increased sales through late 2025, ensuring operational stability and growth.

“The more people get their hands on our product, the more they like it, or they tell their friends, and the faster we can continue to improve the product,” Lorenc said. “So it’s a bit of catch-up, to be honest.”

The new funds will be used to scale operations, invest in automation and Chainguard’s software factory, and support new AI workloads with GPU acceleration to deliver more value to customers, Lorenc said. Supporting AI workloads has been tough for organizations due to the high performance and complex configurations required, and Chainguard aims to simplify this through robust support and automation.

“These are low-level system drivers that you need to get working on Linux,” Lorenc said. “There are different versions of the drivers, different versions of GPUs on every single cloud. And if you don’t get it right, it’s 100X performance decrease. And this has been an area where everyone is trying to scale as fast as they can.”

Lorenc said the rapid adoption of AI workloads caught Chainguard by surprise, particularly in regulated environments and large enterprises. Securing AI workloads involves managing high-performance contexts and low-level system drivers across various GPUs and cloud environments, which Lorenc said can significantly affect performance if not done correctly.

“I thought it would be another year or so before getting thrown into regulated environments and large enterprises, but the adoption here has just surprised everyone,” Lorenc said.

Why Europe, US Public Sector Offer Promise

Customers have responded positively to Chainguard’s new AI workload support. They appreciate the increased efficiency and value but demand faster implementation and more extensive support. The company plans to use the $140 million to expand its open-source software catalog, build new projects and ramp up sales and marketing, particularly focusing on international markets and the public sector.

Chainguard will begin its international expansion in Europe due to more stringent regulations and cyber requirements as well as the need for full data control, according to Lorenc. European regulations are becoming harsher – especially regarding open-source software, which Lorenc said has made it harder to build and use open source quickly.

The U.S. public sector, meanwhile, has seen rapid container adoption, making the company’s technology a good fit for these settings, particularly with the growing use of Kubernetes in critical applications. The company aims to expand its catalog of open-source software – currently supporting around 800 images – by building new projects as they emerge rather than catching up on a backlog, according to Lorenc.

“Kubernetes is running inside of F-35s for BattleTech deployments in Afghanistan,” Lorenc said. “This stuff is everywhere, and it’s happened over the last three or four years.”

Success metrics for the Series C round will focus on growth targets over the next 18 months, Lorenc said, emphasizing rapid customer acquisition and market expansion. Lorenc said Chainguard’s primary competition comes from internal engineering teams within companies rather than external competitors since the decision to build vs. buy is the key consideration for potential customers.

“It’s most often thousands and thousands of engineers inside of companies,” Lorenc said. “We’re not really bidding against other companies. It’s build vs. buy – the decision that most of our customers have to make. And that’s something where economies of scale and investments in automation can really help.”