Egress raises $40m growth funding from US private equity firm

FTV Capital lead funding round which Egress says will enable it to expand throughout the US, and continue its growth in the UK and Europe

Egress has secured $40 million of growth funding from a series C funding round led by US-based private equity firm FTV Capital.

Tony Pepper, CEO of Egress, who has previously criticised the UK's private equity market, told Computing that Egress will use the money to "attack the US market".

"We're looking to internationalise, so you look down the barrel of the US market and ask what's the best chance of success for us to not just attack, but go on and dominate that market? And the answer is US investors.

"The level of funding available and the ambition of US investors aligns well to growth businesses."

He explained that the funding round heralds a significant change for his business.

"This is a big step change for us. It enables us to put our foot down and accelerate. For a UK business to raise this amount from a US investor is rare," he added.

Pepper said that Egress were helped by their ability to perform in compliant-heavy markets, with recent regulations including GDPR raising the profile of what they're able to do for their clients among US firms.

"The US is a market which is always compliance-led, so US investors look over here at what happens with GDPR, and decide that it's ahead of what they need in the US. They see it has more forward thinking, driving data security and privacy as board-level issues.

"Because GDPR has driven fundamental change across businesses. FTV looked at that and realised that the compliance market in the US only going in one direction, and they felt that Egress were stronger than the US players at delivering technology solutions to cater for compliance needs around unstructured data.

"What they like is our platform approach, which is really great for unstructured data, on top things like message encryption and file share collaboration, tackling all of it in a regulated market."

So what next for Egress now that the coffers are full? According to Pepper it's all about "making the bike go faster". Certainly the new funding round blows previous amounts raised well out the water, with around $3.6 million raised in 2014, and a further $3.8 million in 2017, the firm going from under 25 employees to around 200 over the same period.

"I've always been firm believer that in today's market, too many firms are raising only what they feel they can rather than what they actually need. We've raised modest level of capital in the past to get us where we are today, but now the fact that we're able to raise this level shows that our products meet problems customers have today.

"So we need to reach more customers in more markets. And that means a lot more in customers the US and Europe, and more in the UK."

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Egress raises $40m growth funding from US private equity firm

FTV Capital lead funding round which Egress says will enable it to expand throughout the US, and continue its growth in the UK and Europe

With Egress serving many large customers in local and central government, including a major contract with the Ministry of Justice, Pepper describes Egress' platform as "proven".

"Our technology platform is proven now. We've proven we can deliver in some of most complex and secure environments in industry. Once you can tackle those, catering for others is comfortable.

"When you're helping customers share highly sensitive data through a variety of means, the key that those customers understand their data will be safe. Once they know it's safe, they need to know we can scale to the levels we know they need. The size of organisations we're working with definitely helped us [secure this funding] and will stand us in good stead in breaking into bigger businesses in the US."

Egress plans to attack those markets in the US where it has found considerable success in the UK, including government, healthcare and finance, describing new announcements as "imminent".

He finishes, explaining that this new funding round wasn't expected earlier in the year.

"We didn't go into 2018 thinking there was going to be another funding round. But you've always got to be thinking six months ahead. You plan the next two to three years in advance, but you've always got to be prepared to adapt within six months.

"With this level of capital it would be very surprising if there was another funding round in the next 18 months, but never say never."