For CEO James Foster the chance to ring the closing bell at the Nasdaq stock exchange on Thursday is the culmination of the work he has put into the now $1.7 billion brand since 2013.
"Eight years ago, we had these poker chips made with IPO in the back and the ZeroFox logo on the front," Foster said. "We gave them to all of our early investors and early employers and said 'thanks for taking a bet on us.'"
To honor the public listing of ZeroFox (NASDAQ: ZFOX), one of Baltimore's largest cybersecurity companies, Foster handed out a new batch of poker chips. Now he has a different goal, for ZeroFox to become $10 billion company.
The first step toward that $10 billion goal is ZeroFox's unique route to going public. Instead of going through a traditional initial public offering, the company now called ZeroFox Holdings Inc., merged with an existing public company, L&F Acquisition Corp, a Special Purpose Acquisition Company, or SPAC.
A SPAC is a company that exists for the sole purpose of raising funds to help a private company go public without going through a traditional initial public offering (IPO), allowing companies to skirt by certain IPO disclosure requirements. Their effectiveness has also been questioned as a recent report from Renaissance Capital found that, of the 199 companies that went public through a SPAC merger in 2021, "only 11% trade above the offer price, and the group averages a -43% return."
Foster said ZeroFox is different than most SPAC companies since they have a large customer base of established companies such as NASA, Microsoft and Intel.
“The SPAC route was a perfect fit for our goal to become a public company, raise growth capital, and simultaneously execute on our strategic acquisition of IDX," Foster said. "We have revenue and a solid business model with strong financial performance over the years. By going through the SPAC process we also acquired IDX, which even further expands our offerings and gives us a larger market opportunity and the ability to introduce additional value to existing customers.”
As part of the L&F Acquisition merger, ZeroFox acquired IDX, one of the nation's largest providers of data breach response services. The addition of the Oregon company provides ZeroFox with a new set of products focused on consumer privacy and a new group of customers. ZeroFox specializes in protecting a company's external infrastructure, such as mobile applications, social media accounts and websites.
ZeroFox also received an influx of $180 million in financing led by Monarch Alternative Capital, Foster said. Other investors include Victory Park Capital, Corbin Capital, New Enterprise Associates, Highland Capital, Alsop Louie Partners, Blue Venture Fund, Peloton Equity, Forgepoint Capital and ZeroFox’s CEO James Foster.
"Most people out there right now are just kind of buckling down trying to get through this this kind of difficult market," Foster said. "We looked at this as an opportunity."
There are no plans to remake the ZeroFox formula, Foster said. He hopes to continue to invest into building new features for customers and making new hires internationally. The company has made three acquisitions in less than three years, and Foster said he will continue to look for strategic acquisition opportunities to drive expansion.
Foster believes that going public showcases how ZeroFox has matured since its founding, with a stable business model, a large size, and a solid financial future compared to a startup.
"There's a recognition of maturity when you become a public company," Foster said.
The combined company has 750 employees, around one-third of whom work in the Baltimore-Washington region.
Shares of ZeroFox were up more than 29% to $13.50 as of roughly 3 p.m. Thursday after opening at $10.
