Verkada, a provider of cloud-managed security cameras, access control and smart building solutions, is reportedly in talks to raise $200 million at a valuation of $4.5 billion, according to Bloomberg. This new valuation represents a significant premium over its last funding round, highlighting the growing investor confidence in Verkada’s business model and market potential.
The reported valuation, cited by Bloomberg sources familiar with the matter, reflects Verkada’s market position and signals broader implications for the security sector: The move toward subscription-based revenue models and integrated security platforms is reshaping market dynamics, driving investor interest and redefining the future of physical security.
Growth and Strategy
Verkada’s rise as a startup founded in 2016 reflects its ability to capitalize on these trends, explained Owen Kell, senior IoT & security research associate at Memoori, a London-based analyst company focused on the smart building industry.
“Verkada’s SaaS-based, cloud-managed solutions have resonated with organizations seeking flexible, scalable solutions,” said Kell. He noted that the company’s customer base grew from 2,500 clients in 2020 to 25,000 globally by July 2024, with over one million devices online across 85 countries.
“This growth has largely been driven by capturing low-hanging fruit in underserved verticals like education and healthcare, which demand simple, unified security solutions,” Kell explained. However, he warned that these sectors may approach saturation, presenting challenges for Verkada to maintain its rapid growth.
Looking ahead, Kell said, “Expansion into new geographies or product categories could unlock additional growth, but these moves come with notable challenges. Geographic expansion, particularly into Europe or Asia-Pacific, would require navigating complex regulatory environments and competing with entrenched players who often tailor their offerings to regional preferences.”
Veteran investment banker Alper Cetingok, senior managing director at Raymond James & Associates, also placed Verkada’s valuation within a broader context. “It signals increased interest and optimism around physical security, driven by technological advancements and the move toward subscription-based revenue models,” he said. He emphasized that the security industry is shifting from one-time hardware sales to recurring managed services, which offer higher margins and long-term revenue potential.
“This business model transition is attracting significant investor interest,” said Cetingok. He pointed out that companies like Verkada exemplify how SaaS-driven strategies can redefine the value proposition in the security sector.
Adding to this perspective, access control expert Lee Odess, CEO of The Access Control Collective, highlighted a critical divide within the security industry, contrasting what he calls the $10 billion and $100 billion mindsets. The $10 billion mindset represents a traditional view of the industry focused on core functions like “locking and unlocking” and “keeping bad people out.” In contrast, the $100 billion mindset embraces a broader vision, leveraging the utility of those security systems to drive additional value such as operational efficiency, new revenue streams, and integrate data and analytics into business intelligence platforms.
Odess explained that Verkada exemplifies the $100 billion mindset, with its platform approach reflecting a shift toward innovation and enablement that goes far beyond traditional security roles. This broader vision positions the company to tap into a vastly expanded total addressable market (TAM) that includes both the traditional $10 billion high security market and the additional opportunities created by modern, tech-enabled solutions.
Odess also framed Verkada’s growth within the context of a “platform” strategy. “In my trends for 2025 I also included my word for 2025 and that word is ‘platform.’ You are going to hear it a lot. This is a platform story. Not just a security or camera or access control story. Yes, it’s rooted in the utility of our sector but it’s about the broader platform of enablement, awareness, automation and much more,” he said.
Industry Trends and Valuation Comparisons
Cetingok and Kell both emphasized that Verkada’s valuation is not an outlier but part of a larger industry trend. “This is not an isolated incident,” Cetingok stated, citing other high-profile valuations, such as the reported $5.5 billion for Flock Safety, an Atlanta-based manufacturer and operator of automated license plate recognition (ALPR), video surveillance and gunfire locator systems. “The sector’s growth trends and the adoption of technology have catalyzed investor interest.”
Cetingok also highlighted the unprecedented volume of transactions in the security sector over the last five years, calling it the most active period in the industry’s history. “The appetite for investment in physical security is at an all-time high, driven by the sector’s evolution and the growing realization that digital transformation is a necessity,” he observed.
Kell pointed out, “High valuations for tech-centric companies are becoming more frequent as the security industry undergoes digital transformation, favoring software and AI-driven solutions.” However, he also said that Verkada’s trajectory is unique, noting the company’s “reliance on aggressive, sales-driven scaling efforts makes its trajectory somewhat unique compared to competitors who typically scale more gradually.”
Risks to Sustained Success
Despite its achievements, Verkada faces significant risks. Kell highlighted cybersecurity concerns as a primary challenge. “Perceptions of potential cybersecurity vulnerabilities remain a critical risk, particularly for enterprise clients in sensitive sectors like healthcare, education and government,” he said. He referenced the 2021 breach that compromised footage from 150,000 Verkada cameras, adding, “Strengthening its security posture is essential to mitigating future reputational and financial impacts.”
Operational challenges also loom large. “Adapting to local regulations and competing against entrenched incumbents in regions such as Europe or Asia-Pacific may require adjustments to its product and go-to-market strategies,” said Kell. He also warned that Verkada’s reliance on a closed ecosystem could become a liability, stating, “If competitors deliver more open, scalable solutions, Verkada’s model could limit its appeal to organizations prioritizing flexibility.”
Cetingok identified another key risk: investor confidence. “The biggest question is whether Verkada can sustain its current valuation trajectory as it accesses the public markets,” he said, making reference to recent instances in which IPOs for other highly regarded private companies fell short of expectations. “At some point, Verkada will need to transition from private funding to the public markets, where valuation scrutiny has been quite high.”
Another challenge lies in sustaining the company’s aggressive growth model. “Anything that feeds that growth engine is a critical factor to the sustainability of that valuation level,” said Cetingok. He warned that diminishing returns in saturated markets could hinder Verkada’s trajectory, requiring significant investments in new markets and product innovations to maintain momentum.
The Road Ahead
Both Kell and Cetingok agree that Verkada’s valuation underscores strong investor confidence in the security sector’s future. However, sustaining this valuation will require balancing rapid growth with operational depth and navigating risks tied to cybersecurity, regulation and customer retention.
“Verkada’s story is one of potential,” said Kell. “Whether it evolves into a long-term leader depends on how it addresses these challenges.”
Cetingok echoed this sentiment, emphasizing the broader trends at play. “The physical security market is evolving rapidly, and Verkada has positioned itself well to capitalize on these shifts. The challenge will be maintaining that position while addressing the inherent risks of its business model.”
