Okta gets $25M more to take on cloud identity management

Okta, an almost-four-year-old startup pushing a new type of identity management aimed at cloud-based enterprise applications, has raised $25 million in third-round funding. This round brings the San Francisco-based company to $52 million in total funding. New investor Sequoia Capital led the round with existing investors Andreessen Horowitz, Greylock Partners, Khosla Ventures and Floodgate also participating.

Okta is part of the cohort of companies that have seen the shift to the cloud as an opportunity to rethink the way legacy enterprise software is built. Other players include Boundary, Aryaka and Workday. Each of these firms has seen the way that cloud computing and software as a service can disrupt the enterprise IT market and have made bold bets building out new services that take advantage of the decentralized nature of the cloud, cheaper compute or new business models. The real question as the startups gain customers and credibility is which of the IT giants will buy them and for how much of a premium?

Okta, for example, offers a centralized identity management platform that competes with services such as Microsoft’s (s msft) Active Directory and Oracle’s (s orcl) Identity Management suite. Okta’s software works to establish user identity on both cloud applications but also for legacy and on-premise programs. This saves Okta’s customers from having to use two different identity management products for employees. Todd McKinnon, CEO, Okta told me in an interview ahead of the announcement that it has seen a lot of success recently stealing customers from the established vendors, and that the funding will help it continue to invest in connecting its platform to older, legacy applications that its customers want integrated into the Okta software.

Otka says it has added more than 140 enterprise customers and 300,000 users to its service in 2012, including Allergan, BMC(s bmc) Software, Clorox, Groupon(s grpn) and National Geographic. Okta has developed relationships with more than 2,000 cloud applications, all of which come pre-integrated in the Okta Application Network, and counts leading enterprise SaaS companies such as Jive(s jive), Lithium and SuccessFactors(s sap) as customers.