(Bloomberg) — In some ways, Vanta Inc. looks like a startup from a frothier era. It’s run by a 35-year-old entrepreneur in San Francisco and sells software primarily to other startups. On Wednesday, Vanta became a unicorn, with a valuation of $1.6 billion, less than a year after raising its first institutional capital, a rare achievement even in boom times.
But Christina Cacioppo, the founder and chief executive officer, wants everyone to know she’s not running a typical, cash-burning technology startup. She bootstrapped the company for years after founding it in 2016. She refuses to serve gourmet coffee in the office. (Vanta buys beans in bulk from Costco.) The company used to pay for employees to access multiple workplace chat tools with overlapping functions. (Now they use only Slack.)
These are the things venture capitalists want to see right now. Investors who, for the last decade, prized the costly art of user growth are suddenly charmed by thriftiness. Economic uncertainty is driving the shift. Although it’s resulting in fewer investments, the change is lifting companies like Vanta, which raised $100 million this week in a deal led by Craft Ventures.
Vanta’s software offers companies a way to easily make their systems compliant with data security standards. Sequoia Capital, which led Vanta’s previous round and kicked more into this one, sees Cacioppo as a founder for the moment. “She has made a bunch of choices along the way that has allowed them to stay lean,” said Andrew Reed, a partner at the firm. “The market is rewarding disciplined companies.”
To drive the message home, Cacioppo invited Kevin Kelly, a senior managing director at Sequoia Heritage, the firm’s wealth-management arm, to deliver a downer of a speech to Vanta’s 250 employees last month. Kelly adapted a talk Sequoia had been giving to leaders of its portfolio companies about how to survive tough times.
Cacioppo started Vanta in the more buoyant days of 2016. She left her job as a product manager at the file-storage provider Dropbox Inc., where she experienced the complexities of securing people’s data. Enabling startups to achieve the same standards as a big company—the mishmash of acronyms and numbers, like SOC 2, ISO 27001, HIPAA and GDPR—would allow them to compete for the same security-conscious customers. It also runs compliance tools continuously, letting startups quickly prove to prospective customers that they’re careful with data. The name Vanta is a play on the word advantage.
Modern Treasury, a startup that makes money transfer tools, said Vanta’s compliance tools helped it win clients. “Vanta is a game changer,” said Sam Aarons, the chief technology officer.
David Sacks, a partner at Craft, said he recognized the importance of compliance when he chose to lead the investment in Vanta. Before co-founding Craft, he took over Zenefits, a human-resources startup, after it failed to comply with insurance-licensing rules. “The cost of screwing up compliance or having a security breach are huge,” he said. J Zac Stein, a venture partner at Craft, sits on Vanta’s board.
Last year, Vanta was generating revenue at an annual rate of $10 million, according to the company. Cacioppo declined to disclose sales numbers for this year. Vanta isn’t profitable, though it has been at times in the past, she said, and for now has chosen sustainable growth over profitability.
The new financing brings Vanta’s total to about $163 million. The company attributes the fundraising triumph to the company’s ability to grow without profligate spending. “Last year, the game was ‘growth at all costs,’” Cacioppo said. “This year, it’s ‘cash is king.’”
(Updates with board member detail in the eighth paragraph. Previous versions corrected the company’s valuation and number of employees.)
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