Material Security
Startup that scans and protects email and cloud data sitting inside Microsoft 365 and Google Workspace.
On the record
Checkpoint: Next funding round or strategic sale decision, likely forced by cash needs
The call
Material built a real product with real customers, but Microsoft is copying its core features for free, and the money and headcount trends show the company losing that race.
Material Security sells software that catches phishing emails and other email threats for big companies using Microsoft 365 or Google Workspace. The problem: Microsoft and Google are adding the same detection features directly into their own products at no extra cost, which makes it hard for Material Security to convince customers to pay for a separate tool. Material Security's growth has slowed sharply (only 11% per year), it has cut its workforce by more than a third, and its value on the resale market has dropped 73% from what investors paid three years ago. The one thing that could matter most is whether Material Security can keep its existing big customers or whether they start switching to Microsoft's or Google's built-in protections instead.
Why
01
AI pressure: Microsoft Defender for Office 365 native AI detection, Proofpoint Nexus AI. AI-based phishing detection is now bundled free into the platforms Material sits on top of, cutting its reason to exist. Could AI do the core job? Only partly.
02
Bigger players: Microsoft (Defender for Office 365). Microsoft owns the mailbox and is shipping the same detection and triage features Material charges for, at no extra cost. Could a giant copy it? Yes, easily.
03
What protects it. Deep OAuth and historical-scanning integrations that took years to build, plus over 100 enterprise accounts already wired in.
What would change this call
Material announces a new funding round or is acquired within 12 months. Would show whether the 73% secondary-market valuation haircut becomes a formal down-round or exit.
Material's headcount count in public filings or LinkedIn continues falling below 70. Would confirm continued cost-cutting and shrinking scale rather than stabilization.
Microsoft or Google ship native OAuth/AI-agent governance features matching Material's product. Would show Material's remaining differentiation being bundled away by the platform owner.
Material's headcount count in public filings or LinkedIn continues falling below 70. Would confirm continued cost-cutting and shrinking scale rather than stabilization.
Microsoft or Google ship native OAuth/AI-agent governance features matching Material's product. Would show Material's remaining differentiation being bundled away by the platform owner.
Key numbers
- Revenue grew only 11.3% YoY to $18.3M in 2024
- Headcount fell from 108 to 70 employees
- Secondary market values it at $0.3B, down 73% from $1.1B
Named risks
- Valuation crystallizing into a formal down-round given ~$0.3B secondary pricing vs $1.1B Series C.
- Sustained headcount contraction (108 to 70 employees, 2023-2026) signaling cost pressure or slowed growth.
- Platform bundling by Microsoft and Google commoditizing baseline detection features.
- Revenue growth of only ~11% YoY is far below pace needed to justify prior $1.1B valuation.
- Cooling cybersecurity M&A and valuation multiples (4.5x to 3.5x) pressuring exit and fundraising terms.
Rivals, as read in July 2026
| Rival | Direction | Evidence |
|---|---|---|
| Microsoft (Defender for Office 365) | losing to | Native AI detection bundled into M365 erodes Material's differentiation, as of 2026 comparisons |
| Google Workspace native security | losing to | Platform owner absorbs baseline AI detection Material was built to provide |
| Abnormal Security | losing to | Better-funded direct rival in ICES category outpacing Material's 11% growth, 2026 |
| Proofpoint | contesting | Proofpoint Nexus AI runs comparative marketing against category peers, May 2025 |
Questions people ask
- Is Material Security profitable?
- No profitability data is disclosed. Third-party estimator Latka reports 2024 revenue of $18.3M (up from $16.4M in 2023), about 11.3% YoY growth, well below the pace expected of a company still holding a $1.1B private valuation, as of November 2025.
- Is Material Security laying people off?
- Headcount has shrunk from 108 employees in December 2023 to 89 by November 2025 (Latka), and a separate tracker (TrueUp) shows just 70 employees as of mid-2026, down from 79 at end-2022 when the company said it wanted to at least double staff.
- Could AI replace Material Security's product?
- Core detection and triage tasks like phishing pattern-matching are increasingly automatable by generic LLM tools, and Microsoft Defender and Proofpoint Nexus AI already ship overlapping native AI detection as of 2025-2026, though Material's deep API integration and OAuth remediation actions resist pure model replacement.
- Who is Material Security's biggest competitor?
- Microsoft Defender for Office 365 is the biggest structural threat since it is bundled natively into the platform Material sits on top of; direct point-solution rivals include Abnormal Security, Sublime Security, IRONSCALES, Avanan, and Coro, as of a June 2026 competitor comparison.
- Who owns Material Security?
- Material Security is privately venture-backed, founded 2017 by Abhishek Agrawal, Ryan Noon, and Chris Park. Investors include Andreessen Horowitz, Founders Fund (Series C lead, May 2022), Elad Gil, Snowflake Ventures, and Amplify Partners; total raised is about $162M.
- How much funding has Material Security raised and at what valuation?
- Material Security has raised approximately $162M total: a $22M Series A in August 2018, a $40M Series B in May 2021, and a $100M Series C in May 2022 that valued the company at $1.1B, per Fenwick and PitchBook records.
Timeline
- 2026-06-30TrueUp shows 70 employees and ~$0.3B implied secondary valuation
- 2026-06Material publishes OAuth Risk Report analyzing 22,000+ OAuth apps
- 2025-11-27Latka reports 2024 revenue of $18.3M, 89 employees
- 2025-10-06Company claims over 100 enterprise customers in podcast interview
- 2023-01Ryan Noon steps down as CEO to Chairman; Abhishek Agrawal becomes CEO
- 2022-05Series C: $100M raised at $1.1B valuation, led by Founders Fund
- 2021-05Series B: $40M raised, led by Elad Gil with a16z
- 2018-08Series A: $22M raised, led by Andreessen Horowitz
- 2017Material Security founded by Agrawal, Noon, and Park
Revision history
21 July 2026
First assessed. Losing its protection. The text above is fixed as of this date and is not edited afterwards.
In the same band
Sources
- Securing Email Is More Than Just Phishing Protection (2026-06-01)
- How Much Did Material Security Raise? (2025-05-22)
- Fenwick Represents Material Security in $40M Series B Financing
- Material Security Series C Announcement
- Material Security 2026 Company Profile
- About Us and Leadership
- Material Security (2026-06-30)
- Material Security Revenue 2024 (2025-11-27)
- Material Security's product-market fit journey (2025-10-06)
- Helping Secure Our Customers
- 91% Phishing Triage Reduction
- Material Security Raises $100M to Protect Sensitive Content (2022-05-11)