Arctic Wolf, a fast-growing cybersecurity firm, is relocating its headquarters to Eden Prairie, already home to its largest office, from Sunnyvale, Calif.
Nick Schneider, the company’s chief revenue officer and a veteran of Minnesota’s tech scene, said last week that the Midwest is a hub of client activity and talent for the firm.
“It’s really about the talent level,” he said. “There’s a good ecosystem of tech companies in the Twin Cities. We’ve been able to pull from some of those.”
With the move, Arctic Wolf expects to grow from 200 to 350 workers in Eden Prairie next year.
With the firm’s sales and marketing operations based here, much of the expansion will happen in that part of the business, Schneider said.
But he added security and other technical jobs will be added here.
Even with the move, Schneider said, “There will be no reduction in force in any other location.”
Minnesota is less expensive to employ skilled workers than Silicon Valley.
“But the decision is based on a local talent pool that has experience,” said Schneider, who previously worked at the former Compellent-Dell, a data-storage outfit, and Code42, the Minneapolis-based cybersecurity firm.
“It’s less about the economics of the individuals,” he said. “And more about the loyalty and trust we have found here, versus some other locations.”
Arctic Wolf also this month raised $200 million in its most recent round of equity capital funding, led by Viking Global Investors, and included existing institutional investors.
The price-per-share indicates a market value of $1.3 billion for the several-year-old firm. The most recent funding round comes not long after one in March in which the firm raised $60 million.
“Cybersecurity is not optional and we are doing well right now within our sector,” said Dan Larson, Arctic Wolf’s senior vice president of marketing and who reports to Schneider. “Achieving that $1.3 billion valuation is rare in our business. That’s ‘unicorn’ status.”
Arctic Wolf, which declines to discuss most financial statistics, said it is growing revenue at a 100%-plus annual clip. It focuses on small- to mid-sized businesses and the Midwest is home to its biggest concentration on customers. The additional capital will help it add people in Eden Prairie and elsewhere.
The company’s chief executive, Brian NeSmith, will remain in Silicon Valley.
“Businesses continue to make significant new investments in cybersecurity tools, yet we still see breaches in the headlines,” NeSmith said in a statement. “The rapid growth of Arctic Wolf is driven by organizations realizing they don’t have a tools problem, but an operational one, and that they can’t solve security operations challenges on their own.’’
Dmitry Dakhnovsky, managing partner at Stereo Capital, an Arctic Wolf investor, said the managed-security market has struggled with a shortage in security operations talent and “misaligned pricing models.”
“We are excited to back Arctic Wolf as the only scale platform that combines a state-of-the-art technology stack with top class security analysts in a single offering,” Dakhnovsky said. “Arctic Wolf brings true enterprise-grade security to businesses who would not be able to achieve it on their own.”
The Twin Cities is not Silicon Valley, but its tech scene has scored several successes this past year, all in the realm of software.
Minneapolis-based JAMF Holding Corp., a provider of data management services, saw its shares more than double on their first day of trading in July and now has a market cap of $3.8 billion. Since listing, it made an acquisition and staged a virtual version of its annual user conference.
Sezzle, also of Minneapolis, also achieved a unicorn-level market valuation in its first year of trading on the Australian stock market. The company is on its own hiring spree as it races with companies around the world to provide buy-now-pay-later financing to retailers.
“We bet on Minnesota talent early and had success, and you’ve seen other tech companies be successful here,” Schneider said.
Eden Prairie Mayor Ron Case is happy with the latest developments.
“We are thrilled that Arctic Wolf has selected our city to be its new headquarters and cannot wait to see what the future holds for them,” Case said last week.