The private equity firm led a $100 million round of funding for Zscaler that the parties announced Monday, Aug. 3. EMC (EMC) and Lightspeed Ventures also participated in the investment, which pushes Zscaler's valuation above $1 billion.
Nehal Raj, a partner at TPG who is joining Zscaler's board, said in a phone interview that the firm considered investments in legacy cybersecurity firms that deploy services through an appliance, or a dedicated server that resides in a client's data centers, but became invested in Zscaler because of its breadth of cloud computing offerings.
"Security has been a little behind in that trend but we are starting to see security moving in a big way toward the cloud as well," he added. "We see Zscaler as the leader in that category of security."
The private equity firm made the investment through its TPG Growth fund, which backs pre-IPO companies. Had it purchased a mature, legacy security company, the firm would have drawn from its TPG Capital fund, which is geared toward later-stage LBOs.
Among other goals, Zscaler CEO Jay Chaudhry said the funds from TPG will help the company build its partnerships with "channel partners," such as telecom service providers who need to secure networks. "They will be able to sell cleaner pipes," he said.