Tailscale, a Toronto-based corporate virtual private network (VPN) startup, has raised $160 million USD (roughly $230 million CAD) in Series C funding. The company plans to use the new capital to scale its operations and meet the growing demand from artificial intelligence (AI) companies using its software.
The funding round was led by Silicon Valley venture capital firm Accel, with participation from existing investors CRV, Insight Partners, Heavybit, and Uncork Capital. The latest investment brings Tailscale’s post-money valuation to $1.45 billion USD (around $2 billion CAD), according to co-founder and CEO Avery Pennarun.
In addition to Accel, angel investors including George Kurtz, CEO of cybersecurity firm Crowdstrike, and Anthony Casalena, CEO of website builder Squarespace, also joined the round.
Tailscale will use the funding to expand globally and grow its engineering, product, and sales teams. The company also plans to hire more employees in Canada, citing the potential for global collaboration amid rising trade tensions. Pennarun expressed that Canadians are well-positioned to lead in this area.
The company has experienced rapid growth. In January, Tailscale reached 10,000 paid business clients and doubled its customer base in less than a year. Since then, it has grown to 150 employees, and its paid business clients have increased by 20% since January. The company has not disclosed its annual recurring revenue but claims it is growing over 100% year-over-year.
Founded in 2019 by former Google engineers, Tailscale offers a zero-configuration VPN that helps companies and individuals securely control their data with ease. It is designed to be simple to set up, enabling teams to access network services without the complexity of traditional VPNs.
Tailscale serves some of the world’s most prominent AI startups, including Perplexity, Mistral, Groq, Hugging Face, and Toronto-based Cohere. Other clients include Instacart, SAP, Telus, Duolingo, and Motorola.
With this round, Tailscale has raised a total of $275 million USD (about $395 million CAD). The company previously raised $128 million in Series B funding in May 2022, which valued it at over $1 billion CAD. Despite receiving acquisition offers, Pennarun has confirmed that Tailscale intends to remain independent and is on a path toward a potential initial public offering (IPO) in the future.
“Tailscale is focused on growing as a private company for now, with a long runway to profitability,” said Pennarun. “We’re ready to weather economic storms while continuing to expand.”
