Knox lands $6.5M to compete with Palantir in the federal compliance market
Securing lucrative federal software contracts is a highly sought-after goal for many technology companies. However, this ambition often comes with a significant hurdle: achieving government SaaS security compliance, famously known as FedRAMP. This rigorous certification process can notoriously take years and demand substantial financial and operational resources, often deterring even well-established firms.
According to Irina Denisenko, CEO of Knox, obtaining FedRAMP certification typically spans up to three years and costs upwards of $3 million, encompassing everything from specialized security operations engineer salaries to exhaustive security audits. Recognizing this immense barrier, Denisenko launched Knox last year. As a federal managed cloud provider, Knox’s core mission is to dramatically accelerate this security authorization, aiming for completion in just three months and at a mere fraction of the cost companies would incur doing it independently.
In a significant boost to its mission, Knox announced on Thursday that it has successfully raised a $6.5 million seed round. The funding was led by Felicis, with notable participation from Ridgeline and FirsthandVC, underscoring investor confidence in Knox’s disruptive approach to federal compliance.
Denisenko’s personal journey into this niche market was forged by first-hand experience. As COO of Class, an education startup, she encountered the daunting challenges of FedRAMP when the company secured a contract with the U.S. Air Force. Rather than enduring a multi-year wait and immense expenditure, Denisenko strategically guided Class.com to acquire CoSo Cloud, a company already FedRAMP certified and managing Adobe’s federal cloud operations. This pivotal acquisition enabled Class to achieve FedRAMP certification in a remarkable six months. Denisenko revealed to TechCrunch that Class would still be mired in the certification process today had they attempted it on their own.
The imperative for a dedicated compliance solution became even clearer late last year with the rapid proliferation of AI agents and the growing concern around national security. This emerging landscape prompted Denisenko to spin out the managed cloud solution into a standalone startup, which she aptly named Knox, a nod to the giant gold storage fort in Kentucky, symbolizing security and resilience.
While large software vendors like CrowdStrike, Palo Alto Networks, and Salesforce possess the resources to navigate FedRAMP certification independently, Denisenko believes that Knox can democratize access to government contracts for a broader spectrum of SaaS providers. Knox’s comprehensive service involves continuous monitoring of applications for all software updates and proactively addressing any changes that might fall out of compliance. “This stuff is legitimately very hard and very risky,” Denisenko stated, emphasizing Knox’s commitment to “bear the risk” for its clients.
Knox is already making significant inroads, currently handling security and compliance for prominent clients including Adobe, Class, Spacelift, and a leading LLM provider. Denisenko projects substantial growth, expecting to end the year with “well north of a dozen customers live in the cloud,” a testament to the acute market need for their services.
Despite the specialized nature of FedRAMP authorization management, Knox faces a formidable competitor in Palantir. Palantir’s offering, known as FedStart, was introduced just two years ago and has quickly garnered high-profile clients such as Anthropic and Windsurf. For Denisenko, Palantir’s early success with FedRAMP only serves to validate Knox’s core mission. “Even Anthropic couldn’t figure this out on their own,” she noted, reinforcing her conviction that going forward, software companies will increasingly opt to outsource their FedRAMP compliance to expert providers like Knox, ensuring quicker market entry and reduced operational burden in the federal sector.
