The $4.6 billion acquisition of cybersecurity firm KnowBe4 is among the largest corporate deals in Tampa Bay history — but its significance extends well beyond the financial terms of the sale.
The Clearwater-based firm announced Wednesday it will be acquired by Austin, Texas-based Vista Equity Partners in a deal expected to close in 2023.
“They’ve been a meteor in terms of creating excitement and value,” said Tony DiBenedetto, a longtime local tech titan and current CEO of Appspace. “The funny thing is, even five years ago, this would’ve been so amazing it’s hard to speak about. And now, it’s the expectation that we will have companies getting funded, have huge success in growth, go public, go private — this is now what the Tampa Bay area is.”
KnowBe4 went public in April 2021. But with the reversion back to a private entity, it is also expected to create the type of equity previously only seen in startup hubs like Silicon Valley and Boston.
DiBenedetto, who sold his company Tribridge in 2017 for an undisclosed amount, added the KnowBe4 deal was “without question” one of the biggest deals in the region in recent history. ConnectWise, which was widely thought to have sold for $1.5 billion in 2019, was the previous biggest-ticket deal.
The KnowBe4 acquisition was slightly above the initial reported price of $4.2 billion, totaling the company’s shares when it debuted at $16 per share on the Nasdaq. The higher price could be attributed to the need for cybersecurity, especially as international tensions continue to rise, coupled with a declining national economy and increased interest in Tampa Bay’s tech scene.
“One industry we haven’t seen take a hit is cybersecurity,” said Saxon Baum, Florida Funders’ vice president of investor relations. “What you’re seeing right now is the public markets are getting crushed. But you have so much money in private equity that was raised that they need to put money to work. A way they can find deals is to go to the public market, and I’m not super surprised to see a big private equity firm like Vista fishing in this pond.”
It’s a testament to the growth of the Tampa Bay tech scene over the last five years, particularly in the lucrative cybersecurity sector. KnowBe4 is joined by Tampa-based heavy-hitters ReliaQuest and A-LIGN, the former of which hit a $1 billion valuation status in 2020.
“Companies here have had to operate in a sound fashion, in a conservative fashion, and the combination helps the business weather the storm better,” Scott Price, CEO of A-LIGN, said. “We’ve had to have that scrappiness. I’ve always said, ‘Why not us?’ and with this transaction, it’s, ‘Why not Tampa Bay?’”
Many of the sources interviewed added that Tampa Bay is no longer a hidden gem and is mainly on the radar for companies and investors.
“This is the continued evolution for all of us that have been in town; it’s the expectation that we’ll continue to have success,” DiBenedetto said. “It starts with the young companies coming out of Florida Funders, and the Tampa Bay Wave and [innovation hub] Embarc [Collective] and then leads to things like this.”
Linda Olson, founder and CEO of the Tampa Bay Wave, is helping foster those startups, specifically in the cyber field. KnowBe4 partnered with the Wave on its CyberTech|X Accelerator program, which has helped 30 startups grow. The nonprofit also received a $2 million grant to help boost the region’s cyber hub.
“This news will only help us build that cybersecurity innovation cluster in the region that the grant was trying to achieve,” Olson said. “It helps build the region’s reputation for cybersecurity talent and success stories. When you think about where you want to build your next cybersecurity startup, you want to put it where others have shown it can be done successfully.”
Those nascent companies also create a talent pipeline, which entices cybersecurity companies to relocate to the region.
“I fully see Pinellas County being an epicenter for innovation and technology — and cybersecurity is one of the primary technology skillsets that is needed because it cuts across all industry sects,” said Cynthia Johnson, director of Pinellas County Economic Development.
There’s also the fact some of KnowBe4’s more than 1,300 employees will likely get millions from the deal — and with any luck, will be investing it right back into the tech ecosystem.
“People know who we are; we’re on the map,” Baum said. “But the way an ecosystem becomes successful is organic growth based on exits. These are people that worked in tech and hopefully would want to stay in tech. And you would think a lot of money would flow downstream and create more money in the Tampa Bay area.”
