Cybersecurity startup Island maps path to IPO

Enterprise cybersecurity startup Island expects to have enough revenue next year to begin pursuing an IPO, CEO Mike Fey tells Axios Pro.

Why it matters: Cybersecurity IPOs have been relatively rare, aside from Netskope and SailPoint.

Follow the money: Dallas-based Island this week raised a $400 million Series F round at $6.4 billion post-money led by Evolution Equity Partners.

The company has hit the $200 million ARR mark with 100% annual growth, Fey says.

It's now raised about $1 billion, with $700 million still in the bank.

What they're saying: "We will have the revenue. We'll have the core fundamentals. Those things will be in place in the next 12 months. What we do after that is going to be about wise timing.... There's no reason to rush it out there," Fey says.

"We're trying to build something truly generational and very valuable, something that is on the scale of a Microsoft," says Fey, who co-founded the company with CTO Dan Amiga.

Flashback: Island launched as an enterprise browser security developer less than five years ago, but has expanded into identity, AI and network security.

State of play: It's been rough for enterprise software stocks.

Cybersecurity has gotten less bruised, but Netskope is still trading 7% below its IPO price, while SailPoint is down 10.3%.

What's next: Likely some significant dealmaking.

"We will get a little more aggressive on M&A. We actually have a couple targets that we're considering," Fey says. "We didn't specifically raise with that in mind, but it is part of what we think a strong company like ourselves should consider."

Zoom in: The company has done some off-the-radar acqui-hires, but with the platform more established and money in the bank, it is now looking for bigger deals.

Island won't look at cyber add-ons, but rather tooling around things like productivity, cost reduction and visibility.

The bottom line: An IPO would put the cybersecurity company on a very exclusive island.