Knox Systems, a NYC-based federal AI-managed cloud provider, has raised $25 million in a Series A funding round led by B Capital, alongside M12, Microsoft’s Venture Fund, Okta Ventures, MongoDB Ventures, Hearst Ventures and Benchstrength.
The funding round follows a $6.5M Seed round led by Felicis, with participation from Ridgeline and FirsthandVC.
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The company plans to use the funds to grow operations and accelerate development.
Knox Systems, the largest federal AI-managed cloud provider, helps government agencies access world-class software quickly without compromising security or capability. While many SaaS companies treat compliance as a complex checklist, Knox focuses on delivering fast, secure solutions. The company bridges the gap between industry innovation and government software adoption, ensuring agencies and military operators get the tools they need at the speed and quality their missions require.
This funding comes at a key moment. Traditional FedRAMP certification can cost $2–5 million upfront, with annual expenses over $1 million. Knox’s pre-authorized environment cuts first-year costs by 90% and greatly lowers ongoing expenses, making federal access feasible for most enterprise SaaS companies. While the U.S. government spends $100 billion annually on software, fewer than 500 of the 30,000+ commercially available SaaS apps are government-ready. Knox’s mission is to provide SaaS vendors with the fastest, most cost-effective path to FedRAMP authorization, helping agencies access secure, modern software critical to their missions.
“This funding lets us expand federal authorization at a time when agencies need fast access to modern, secure technology, and also supports commercial growth,” said Knox CEO Irina Denisenko. “It gives SaaS vendors a faster, lower-cost way to meet federal security standards and reach government customers in weeks instead of years. Knox has become a trusted government-grade security model, and a platform built for demanding federal conditions also provides the reliability commercial organizations need for their critical systems.”
“Knox is driving a long-overdue change in how SaaS companies enter the federal market,” said Howard Morgan, Chair and General Partner of B Capital. “By offering a practical alternative to the old FedRAMP process, Knox creates a win-win: vendors can access federal revenue in months at much lower cost, and agencies get faster access to secure, mission-critical technology. We’re proud to lead this investment at a pivotal moment for federal tech adoption.”
“Knox Systems meets a clear need in the defence ecosystem by cutting the time and cost to deploy secure cloud solutions,” said Leigh Madden, Vice President, National Security, Microsoft. “Their platform helps programs meet compliance faster and deploy modern tools more reliably. Microsoft supports Knox because their growth strengthens the ecosystem our DoW customers depend on.”
“We spent years working toward FedRAMP authorization, but timelines and processes moved more slowly than our customers needed,” said Aubrey Vaughn, VP of Strategy & Business Development, Public Sector at Celonis. “Partnering with Knox, we achieved authorization in under 90 days. This lets us deliver technology to government leaders immediately, giving them critical insights when they need them. Knox has simplified compliance, and removed the obstacles that usually slow public sector innovation.”
As one of only two major operators in this space—alongside Palantir—Knox runs the largest multi-cloud federal boundary across AWS, Azure, and Google Cloud, offering unmatched flexibility with a bring-your-own-architecture model. The company holds Authorisations to Operate (ATOs) across 15 federal civilian and defence agencies, including HHS, DHS, the Department of Commerce, and the FDA.
About Knox Systems
Founded by Tess Kelly-Frazier, Knox Systems runs the largest managed federal cloud, trusted by leading defence, and civilian agencies. Designed for speed, resilience, and compliance, Knox delivers FedRAMP authorisation in just 90 days turning a major government IT bottleneck into the fastest path to modernisation. Knox serves companies like Adobe, Celonis, OutSystems, Armis, and BigID, helping AI and SaaS providers accelerate secure innovation across the federal government.
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