Two-Factor Authentication Startup Duo Security Raises $12 Million From Benchmark

Five-year old startup Duo Security has emerged as a leader in providing secure but easy-to-use two-factor authentication technology to a fast-growing number of enterprise customers. To bolster its growth, the company has raised $12 million in Series B financing from Benchmark, and has added general partner Matt Cohler to its board. Two-factor authentication is nothing new. Security-focused enterprises have required their employees to deploy the technology when logging in to applications and services containing sensitive information for the last several decades. But the world is changing, as organizations are looking to embrace more cloud services and employees are demanding enterprise solutions that look more like the consumer applications they use in their everyday lives. For a while, enabling two-factor authentication meant using clunky, hardware-based token authentication to ensure that a user was who they said they were. Over time, more and more two-factor authentication solutions have moved to the cloud, requiring users to enter in multi-digit codes they receive via email or SMS. In either case, the solution is less-than-ideal for a workforce that is moving increasingly to a bring-your-own-device model for accessing enterprise documents and applications. And with more enterprises moving from on-premises storage and applications to cloud services, the need to lock down sensitive data is more important than ever. Duo Security is hoping to leverage those shifts in employee and enterprise behavior to offer two-factor authentication technology that is highly secure but also incredibly easy to use. With its Duo Push authentication technology users can easily approve a mobile device and authenticate with one tap via push notification. While Duo Push is a key differentiator for the company, it also supports more traditional forms of two-factor authentication, including hardware-based tokens and SMS passcodes. But making two-factor authentication easier for the user only matters so much unless it works with a variety of different applications and services. On that front, Duo Security supports a number of widely adopted enterprise cloud apps like Salesforce, Microsoft Office, Google Apps, and Box. It can also be used to log into enterprise VPNs or built into company's own internal development or collaboration tools via APIs and a web SDK. With the new cash, Duo hopes to ramp up sales and grow its engineering team. Headquartered in Ann Arbor, Mich. with a couple of remote offices on the coasts, the company currently has less than 100 employees. To date, its growth has been driven by what co-founder and CTO Jon Oberheide calls a "high-velocity, low-touch enterprise sales process." Unlike other enterprise sales organizations, a new Duo customer can "be up and ready within hours of getting in contact with our sales team," he said. Thanks to its wide support for a variety of apps and flexibility for enterprise deployment, Duo Security has been growing fast, now supporting more than 5,000 enterprise customers. In the tech world, those customers include names like Facebook, Etsy, Box, Yelp, and Threadless, which is how Benchmark's Matt Cohler came to learn about the company. Cohler is probably best known for his connection to consumer-facing companies like Facebook, Twitter, Instagram, and Yelp, but he's done investments in B2B companies like Zendesk, Domo, and Asana. Still, it was hearing from some employees within that former group of companies that led him to invest. "I first heard about [Duo Security] in the same way that we usually hear about companies, which is from our portfolio," Cohler told me in a phone interview. "These were all companies that are leaders and have very strong technology organizations, and they were embracing [Duo] with enormous enthusiasm." Cohler said Duo's technology touched on three key themes that are changing when it comes to enterprise applications. The first of those shifts is the consumerization of enterprise apps, and how a consumer-class leader in security has yet to emerge. The second theme is the shift to more enterprise employees bringing their own devices to work. And the third is the shift from on-premise applications to cloud-based services. But the most important reason Cohler gave for investing in Duo was just that everyone he talked to raved about Duo Security co-founders Oberheide and CEO Dug Song. "They are universally admired in the industry, " Cohler told me. The new funding comes on top of a $5 million Series A round that had been led by Google Ventures. Previous investors also include True Ventures, Radar Partners, and Resonant Venture Partners.
Ryan Lawler

Ryan Lawler is a Writer at Gigabuzz, focused on covering early-stage startups, especially those with a technology focus and great perks.

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