Minneapolis cybersecurity firm NetSPI raises $410M to expand globally

A New York investment firm is injecting $410 million in fresh capital into Minneapolis cybersecurity firm NetSPI to fuel the company's global expansion, a move that reinforces investor confidence in the company's rising profitability.

The investment from KKR is nearly five times the amount NetSPI raised last May, when it piled up $90 million in growth funding from investors, including KKR, the firm's first investment in the cyber company. It also is one of the largest this year in Minnesota.

NetSPI will use the money for hiring and further development of its technology, according to a release from KKR. In addition to personnel in Canada, NetSPI is expanding its footprint in Europe, the Middle East, Africa and India.

NetSPI, based in Minneapolis' North Loop with more than 400 security professionals on payroll, develops offensive security tools that other companies use to test their cyber defense systems against various threats to uncover gaps and reduce security breaches. The list of clients includes financial institutions, cloud providers and health care organizations.

"We're both grateful and proud of the industry disruption we drove during our partnership with Sunstone Partners," said Aaron Shilts, CEO at NetSPI. "With KKR's support, we are well-positioned to amplify our success."

The company secured its first outside investment in 2017 from Sunstone Partners, an investment firm based in San Mateo, Calif. NetSPI officials did not share the company's value following the recent funding round, which puts it its total of outside growth capital at or above $500 million since its founding in 2001.

Following the company's $90 million raise in 2021, Shilts told the Star Tribune he anticipated the company would finish the year with about $50 million in 2021 sales. So far in 2022, the company has experienced a 61% increase in revenue, year over year.

The funding round by NetSPI is one of the largest by an investor-backed, Minnesota private company this year.

"We are excited to double down on our investment in NetSPI to help build a differentiated leader in offensive cybersecurity," Jake Heller, partner and head of KKR's technology growth team in the Americas, said in a statement. "We have been very impressed by the performance of the company and the exceptional execution by Aaron and his team over the past 18 months. We believe this is just the beginning of what we can accomplish together."