Cybersecurity firm ForeScout files for an IPO, says it had lost $75M on $167M in revenue in 2016, compared to $27M loss on $126M in revenue in 2015
Katie Roof / TechCrunch :
Context & Ripple Effects
ForeScout enters this filing off a January 2016 $76M round led by Wellington Management that set a $1B private valuation, and the S-1 now reveals the cost of that growth push: losses nearly tripled year over year while revenue grew by roughly a third. The company is choosing to expose those economics to public scrutiny rather than raise another private round.
The timing matters because ForeScout is not alone — Zscaler confidentially filed the same month, making this one of the first tests of whether public buyers will pay late-stage private prices for high-burn security vendors.
First-order effects
- Public-market investors get their first complete look at ForeScout's trajectory — a $27M loss on $126M revenue in 2015 becoming a $75M loss on $167M in 2016 — meaning spending is growing faster than sales heading into the roadshow.
- The filing starts the clock on liquidity for existing holders including Wellington Management, whose $1B entry valuation becomes the benchmark the offering has to defend.
Second-order effects
- With Zscaler quietly filed in the same window, the two security vendors get benchmarked against each other, pressuring each to show a credible path off heavy burn before pricing.
- That scrutiny did bite: when ForeScout went on to price its IPO at $22/share, it raised roughly $116M at a valuation below the $1B mark set by the Wellington-led round — public investors repricing a 2016-vintage private valuation.
Third-order effects
- The playbook — file while deeply unprofitable, let the public market reset the private mark — became the standard route for security vendors, echoed two years later when Crowdstrike filed for its own IPO disclosing a $140M net loss on $249.8M in revenue.
- If the pattern holds, late-stage private valuations in cybersecurity act as ceilings rather than floors once companies reach the public market, disciplining how growth-stage rounds get priced.
The trend: Cybersecurity vendors are using IPOs to fund aggressive growth despite widening losses, with public markets systematically resetting the rich private valuations set during the 2016 funding cycle.