Verkada, a six-year-old, maker of building security tools -- it sells video security cameras, door-based access control, environmental sensors, and alarms, all connected on a cloud-based platform -- just raised $205 million in Series D funding at what it says is a $3.2 billion valuation.

Altogether, Verkada has raised $360 million in funding, it says.

On the one hand, it's easy to appreciate what attracted investors like Linse Capital to Verkada's newest round, which also included Michael Dell’s MSD Partners, Sequoia Capital, Next47, Meritech Capital and Felicis Ventures.

Surveillance is a lucrative industry, and based on what Verkada says, since its previous funding round in 2020, it has quadrupled its headcount, adding more than 1,000 new employees; it has opened six new offices; and it has quadrupled its customer count to more than 13,000. Among the wide range of customers listed at its website is Virgin Hyperloop, the Hartford Police Department, and San Rafael City Schools in California.

But boy, did investors have to look away from a lot of alleged terribleness in order to keep funding the company with the same management team in place. Indeed, numerous reports in recent years (that have become surprisingly hard to find online) might easily have driven investors in the opposite direction.

In March 2021, for example, Bloomberg reported that more than 100 employees at Verkada could peer through the cameras of its thousands of customers, including schools and police departments, as well as global corporations like the internet services company Cloudlare.

According to the report, security inside the security company was so lax that Verkada was breached by hackers who gained access to an account that allowed them to see all of the live feeds and archived videos of Verkada’s customers. At the time, that included 150,000 cameras, including inside Tesla, police departments, and hospitals.

A related finding by Bloomberg based on interviews with then-current and former employees was that although Verkada offered a “privacy mode” to customers, certain accounts would allow Verkada employees to turn off that feature and see the camera footage.