On Message with Ben Gross

Sequoia Invests in Barracuda

January 17th, 2006

There hasn’t been a public total of VC investments in anti-spam companies in a while, but the recent $40 million round raised from Sequoia Capital and Francisco Partners may indicate a shift in the relative importance of the appliance vendors. Getting revenue data on private companies isn’t easy, but IDC recently estimated the company had a 1.5 percent share of the messaging security market in 2004 based on revenues of $10mm, but noted revenues nearly quadrupled in 2004.

Clearly, buying market share is current game. A few months ago I spotted one of Barracuda’s vehicles and thought “only in Mountain View.” But sometimes dedicated fanaticism pays off.

While Barracuda is clearly winning market share while undercutting the prices of other vendors, it’s interesting that Sequoia has invested in StrongMail, which specializes in email “deliverability.” StrongMail has claimed in the past that 15-30 percent of legitimate mail is undelivered, so there’s no small amount of potential synergy between Barracuda and StrongMail; selectively opening holes in an anti-spam filter is a temptation for every anti-spam company - or investor.

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