Knox Systems, the largest federal AI-managed cloud provider, announced it has raised $25 million in Series A funding to scale its platform and accelerate access to federal markets for commercial software providers. The round was led by B Capital, with participation from M12, Microsoft’s venture fund, Okta Ventures, MongoDB Ventures, Hearst Ventures, and Benchstrength, along with previous investors Felicis, Ridgeline, and FirsthandVC.
The funding comes just nine months after Knox closed a $6.5 million seed round in June 2025, signaling rapid momentum as demand grows for faster, more cost-effective pathways into government cloud environments. The company aims to dramatically simplify the FedRAMP authorization process, reducing timelines from years to just 90 days while lowering costs by approximately 90%.
FedRAMP, the U.S. government’s standardized security framework for cloud services, has historically been a major barrier for SaaS companies, often requiring $2 million to $5 million upfront and over $1 million annually to maintain compliance. Knox’s pre-authorized environment significantly reduces both initial and ongoing costs, making federal market entry viable for a much broader range of enterprise software providers.
The opportunity is substantial. While the U.S. government spends around $100 billion annually on software, fewer than 500 SaaS applications are currently available for federal use out of more than 30,000 commercially available solutions. Knox is positioning itself to close this gap by enabling faster deployment of secure, modern technologies across government agencies.
The company operates one of the largest multi-cloud federal environments, spanning AWS, Azure, and Google Cloud, and supports a bring-your-own-architecture model that offers flexibility for enterprise customers. Knox currently holds Authorizations to Operate across 15 federal civilian and defense agencies, including the Department of Health and Human Services, Department of Homeland Security, Department of Commerce, and the Food and Drug Administration.
Knox’s platform is already used by major enterprise and AI-driven companies, including Adobe, Celonis, OutSystems, Armis, and BigID. With this new funding, the company plans to expand its authorization capacity and further accelerate the adoption of commercial software within government and defense environments.
The company is positioning its solution as a bridge between private-sector innovation and public-sector deployment, enabling agencies and military operators to access mission-critical technologies faster while maintaining rigorous security standards.
KEY QUOTES
“This raise not only allows us to expand federal authorization capacity at a moment when agencies urgently need access to modern, secure technology, but is a natural extension for commercial adoption. This investment enables Knox to deliver a faster, lower-cost path for SaaS vendors to meet federal security requirements and reach government customers in a matter of weeks, not years. Knox has established itself as the government-grade security model that commercial organizations can rely on for their most critical production environments. A platform built to operate in demanding government conditions delivers a level of trust that translates directly to commercial needs.”
Irina Denisenko, CEO of Knox Systems
“Knox is enabling a long-overdue transformation in how SaaS companies access the federal market. By developing a meaningful alternative to the legacy FedRAMP process, Knox provides a win-win solution for federal agencies and potential contractors alike: vendors can unlock new federal revenue in a matter of months at a fraction of the cost, while agencies across defense and civilian missions gain faster access to the secure, mission-critical technologies they require. We are proud to lead this investment in Knox at such a critical inflection point for federal technology adoption.”
Howard Morgan, Chair and General Partner of B Capital
“Knox Systems addresses a clear need in the defense ecosystem: reducing the time and cost required to get secure cloud solutions into production. Their platform helps programs meet compliance requirements faster and deploy modern tools more reliably. Microsoft is backing Knox because their growth strengthens the broader ecosystem our DoW customers rely on.”
Leigh Madden, Vice President, National Security at Microsoft
“We spent years working toward FedRAMP authorization, but various timelines and processes were moving slower than our customers’ needs. By partnering with Knox, we achieved authorization in less than 90 days. This allows us to get our technology into the hands of government leaders immediately, giving them the insights they need when they matter most. Knox has simplified our compliance path and removed the traditional obstacles that usually slow down public sector innovation.”
Aubrey Vaughn, VP of Strategy & Business Development, Public Sector at Celonis
