Verkada's $4.5 Billion Valuation: A New Benchmark for Cloud-Based Security

In a significant development for the cloud-based security industry, Verkada has reportedly raised $200 million in a funding round led by General Catalyst, valuing the company at $4.5 billion. This new valuation represents a substantial premium over its last funding round, highlighting the growing investor confidence in Verkada's business model and market potential.

Verkada, a provider of cloud-managed security cameras, access control, and smart building solutions, has seen its customer base grow rapidly, with over 30,000 organizations across 93 countries worldwide now trusting its physical security layer. The company's platform approach, which integrates various security solutions into a unified, cloud-based software platform, has resonated with customers seeking flexible, scalable solutions.

The reported valuation reflects Verkada's market position and signals broader implications for the security sector. The move toward subscription-based revenue models and integrated security platforms is reshaping market dynamics, driving investor interest, and redefining the future of physical security. This trend is evident in other high-profile valuations, such as the reported $5.5 billion for Flock Safety, an Atlanta-based manufacturer and operator of automated license plate recognition (ALPR), video surveillance, and gunfire locator systems.

Verkada's rise as a startup founded in 2016 reflects its ability to capitalize on these trends, explained Owen Kell, senior IoT & security research associate at Memoori, a London-based analyst company focused on the smart building industry. "Verkada's SaaS-based, cloud-managed solutions have resonated with organizations seeking flexible, scalable solutions," said Kell. He noted that the company's customer base grew from 2,500 clients in 2020 to 25,000 globally by July 2024, with over one million devices online across 85 countries.

Veteran investment banker Alper Cetingok, senior managing director at Raymond James & Associates, also placed Verkada's valuation within a broader context. "It signals increased interest and optimism around physical security, driven by technological advancements and the move toward subscription-based revenue models," he said. He emphasized that the security industry is shifting from one-time hardware sales to recurring managed services, which offer higher margins and long-term revenue potential.

Adding to this perspective, access control expert Lee Odess, CEO of The Access Control Collective, highlighted a critical divide within the security industry, contrasting what he calls the $10 billion and $100 billion mindsets. The $10 billion mindset represents a traditional view of the industry focused on core functions like "locking and unlocking" and "keeping bad people out." In contrast, the $100 billion mindset embraces a broader vision, leveraging the utility of those security systems to drive additional value such as operational efficiency, new revenue streams, and integrate data and analytics into business intelligence platforms.

Verkada's focus on subscription-based revenue models and integrated security platforms has significantly contributed to its long-term growth potential and market dominance. This shift in business model is driven by technological advancements and the increasing demand for flexible, scalable solutions. By transitioning from one-time hardware sales to recurring managed services, Verkada generates stable, predictable revenue streams, achieving higher margins and long-term revenue potential.



Verkada's platform approach, which integrates various security solutions such as video security cameras, access control, environmental sensors, alarms, workplace, and intercoms, positions the company to tap into a vastly expanded total addressable market (TAM). This broader vision enables Verkada to leverage the utility of security systems to drive additional value, such as operational efficiency, new revenue streams, and data integration into business intelligence platforms.

In conclusion, Verkada's $4.5 billion valuation reflects the growing investor confidence in the company's business model and market potential, driven by its focus on subscription-based revenue models and integrated security platforms. As the security industry continues to evolve, Verkada's innovative approach to cloud-based security solutions positions it as a key player in shaping the future of physical security.