Sources: cybersecurity firm Zscaler to hire banks for potential IPO later this year at a valuation of about $2B
Context & Ripple Effects
This is the first public signal of Zscaler's path to market: sources say the cloud security firm will hire banks for an IPO later in 2017 targeting roughly a $2B valuation. The plan moved fast — within months Zscaler had made a confidential IPO filing, and by March 2018 it was trading on Nasdaq.
The arc matters because the market repriced the company sharply upward: after raising $192M, shares closed the first day up 106% at $33, putting Zscaler near $3.9B — nearly double the valuation bankers were reportedly lining up for.
First-order effects
- Bankers competing for the mandate get one of the most anticipated security listings of the cycle, with underwriting fees tied to a deal targeting about $2B.
- Zscaler's existing investors gain a credible exit timeline, with the bank-hiring step converting IPO speculation into a concrete process.
Second-order effects
- A strong debut would reset the pricing benchmark for other late-stage cloud security startups weighing their own filings, as it did when Zscaler's first-day close nearly doubled its target valuation.
- Public-market investors gain a pure-play cloud security comparable, shifting how private rounds in the category are priced against a listed peer.
Third-order effects
- If the pattern holds — private valuations trailing what public buyers will pay for cloud-native security — more enterprise security firms follow the same hire-banks-then-file-confidentially sequence rather than waiting for later-stage private capital.
The trend: Enterprise cloud security companies are graduating from private markets to public listings faster than their last private valuations suggest, with IPO debuts repricing the category upward.