15 April 2024

Airgap Networks Acquired by Zscaler

Shirish Sathaye, General Partner at Cervin Ventures shares his thoughts on the acquisition.

Airgap Networks, a Cervin Ventures portfolio company, an innovator in agentless segmentation for enterprise IT and OT environments, has been acquired by Zscaler (NASDAQ: ZS). With this acquisition, Zscaler will combine its Zero Trust SD-WAN with Airgap to extend the Zero Trust Exchange to protect east-west traffic in branch offices, campuses, factories, and plants with critical OT infrastructure.  

The Airgap Journey

The Beginning

In 2018, after spending nearly 18 years in various roles across Engineering, Product Management, and Sales at Juniper Networks, Ritesh Agarwal was ready for a change. To explore various possibilities for growth and change, Ritesh enrolled in the Stanford Executive Program (SEP) at the Graduate School of Business. This is an intensive marathon which, according to Stanford, catalyzes evolution and self-discovery. The program was a transformative experience that led Ritesh to re-examine his career in ways he had never imagined.


Cervin Ventures Operating Partner Samir Shah was also enrolled in the same program at Stanford. Samir had enrolled in the program after founding and eventually exiting a Cervin-backed company, Zephyr. During various intense SEP sessions, Samir and Ritesh had deep meaningful conversations and, almost immediately Samir saw that Ritesh had the potential to be an entrepreneur. Samir was drawn to Ritesh’s deep knowledge and hands-on experience in the field of networking and cyber-security. While Ritesh had been contemplating building a disruptive tech start-up, it was Samir’s guidance as a fellow entrepreneur that helped Ritesh take the plunge. 


Ritesh quit Juniper Networks in early 2019 and embarked on his startup journey. Ritesh and Samir would often brainstorm in the Cervin office, whiteboarding and throwing around ideas, which Ritesh would then validate (or abandon). He pivoted twice during the ideation phase before settling on the thesis that campus networks were designed with an outdated architecture that did not fit modern usage patterns and presented a significant security problem. 


Ritesh (left) and Samir at the Cervin office, after closing the first round of financing


Ideating around the ICP in Cervin offices in 2019


Ritesh’s vision for Airgap Networks

Looking back, the future of enterprise connectivity was imminent. Enterprises’ network consumption was transforming. Traditionally, enterprise connectivity evolved around:

- Only a handful of operating systems, mostly Windows, would connect to the enterprise networks 

- Mostly in-office/on-premises user base. The notion of roaming users didn’t exist - not at the current scale

- Various enterprise apps such as file servers, exchange servers, local database servers, etc. were locally hosted 


Therefore, most of the “business” traffic traversed "East-West" within the campus. The "North-South" traffic was limited to “non-business critical” internet access. Therefore, Enterprises relied on perimeter Firewalls, Intrusion Detection/Prevention Devices, and Data Loss Prevention devices to protect against internet threats (North-South traffic). Once within the confines of the organizational networks, East-West traffic communication remained largely unprotected, as it was assumed to be secured. 


We are now fully accustomed to the idea of a “hybrid” workforce, the Internet of Things (IoT), and most of the enterprise apps are delivered in the form of Software as a Service (SaaS). And, all of these technological advancements have a profound impact on how enterprises consume their networks. The network and security vendors must innovate at a rapid pace to keep up with the changing nature of enterprise connectivity, the device mix, and the traffic pattern shifts i.e. East-West to North-South. Moreover, the organization is no longer considered a monolith, and hence the inner organization traffic cannot be assumed to be secured (sometimes referred to as “Zero Trust”).


Airgap’s innovative and patented technology transforms enterprise networks to be secure and scalable. The genius behind the innovation is that the transformation takes place without impacting the customer’s existing network and security investments. This simple and elegant approach can help enterprises struggling with ransomware impacts or cyber breaches.

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Raising Financing 

With a clear mission for Airgap Networks, Ritesh teamed up with Vinay Adavi and Satish Mohan, two veterans from networking and security companies. They started meeting potential investors to raise their financing round. Samir introduced me to Ritesh, so I was one of the first investors Ritesh met. While I saw the market potential of Ritesh’s idea, I was highly skeptical at first. I felt that the technical solution that Ritesh was describing would “never work”. I was also not too excited about backing a founder who had spent nearly two decades working for a large public company. However, I decided to take a chance and offered another meeting, this time to dig into Ritesh’s technical solution just to prove to myself that it didn’t work! However, the simplicity and elegance of the technology that Ritesh proposed blew me away. Cervin led the first investment in Airgap to support them in their quest to transform the Enterprise Campus networks. 

Facing the Black Swan

In March 2020, five months after Airgap raised their first round of financing and began developing a product that would transform the enterprise-campus network, COVID lockdowns meant that the campus as we knew it ceased to exist. Many excited prospects shut the door on Ritesh citing “What campus?”. The company was facing an existential crisis since it was unknown how long the lockdowns would last or what the long-term impacts of them would be. 

The company pivoted on two vectors. First, they started focusing on ransomware which was a “hair-on-fire” problem for Enterprises; and on reducing the attack surface via an agent-less network micro-segmentation. Second, they focused on the manufacturing & healthcare vertical, which were reeling with ransomware attacks, as their ideal customer profile (ICP). 

Through sheer grit and perseverance over the next several years, the company achieved product-market fit, raising several subsequent rounds of financing. Cervin supported them through each of these rounds. 

Even as companies began returning to offices, the initial thesis around the evolution of organizational networks from monolith to a sprawl of sub-networks, held strong, as was the growing need for the Security and Networking team for tools which provide deeper granularity in setting policies around those sub-networks. 

The Final Chapter and a New Beginning 

Five years after Ritesh and his team started Airgap, they were acquired by Zscaler. The acquisition of Airgap Networks by Zscaler underscores its technological depth and market traction. By integrating Airgap's capabilities into its Zero Trust Exchange, Zscaler aims to fortify its offerings, particularly in safeguarding east-west traffic within enterprises.

The company’s success is a testament to the vision and dedication of the Airgap team. For us, the acquisition marks the culmination of an incredible journey alongside the founder and executive team. True to Cervin’s approach of disciplined entrepreneurship, Airgap built a successful business while being efficient in its use of capital. We are fortunate to have been on this journey with Ritesh and the team.