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Venture Capital: The Lifeblood Behind Security Innovation
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DarkReadingTim
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DarkReadingTim,
 User Rank: Strategist
5/8/2014 | 9:33:04 PM
Re: Cyber Security Investors - Experience Matters
Thanks Bob! For those who might not know Bob, he is founder and managing director at Allegis Capital and is one of the leading voices among venture capitalists who invest in cyber security. I filed my stories before I had a chance to speak with him live, so I'm elated to see him commenting here!

Bob, your points about entrepreneurs needing to find the right investors is spot on, and I heard it from all of the startup companies I spoke to. While that advice was important -- we do have some entrepreneurs among our readership -- the thing I found fascinating is how much interaction there is between venture capitalists and security executives (our primary readers here at Dark Reading). I was frankly amazed at how well informed the top security VCs are -- not just about emerging technologies, but about the *problems* that enterprises face. Clearly, you do a lot of talking with security professionals.

I am wondering, and maybe you could comment directly -- how does an enterprise security pro get in touch with smart VC experts like yourself? Can they just call you up? Do you have reports that they can read? How can they get a dialog going with VCs who might be able to give them tips on the next wave of security technology?
BobAckerman
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BobAckerman,
 User Rank: Apprentice
5/8/2014 | 8:06:29 PM
Cyber Security Investors - Experience Matters

Excellent piece Tim.  The substrate for many of your points is that cyber security innovation is largely structured around a relatively small trusted community.  It's these trusted relationships that have been forged over the years that allows us as investors to calibrate start-up teams and their concepts around innovation.  Likewise, these relationships between investors and enterprise customers have a similar dynamic.  I think the take away for prospective entrepreneurs entering into the cyber security innovation ecosystem is that this is a market where experience accounts at all levels.  Pick your investment partners carefully - the right ones can add a lot of value in terms of market knowledge, expertise and supportive networks.  With the wrong investors, you may end spending more time teaching and less time building your company.

DarkReadingTim
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DarkReadingTim,
 User Rank: Strategist
4/24/2014 | 5:42:06 PM
Re: Lighthouse Clients Are Pure Gold
I agree that intelligence sharing is a huge problem, Lorna, but I don't think the startups are going to solve that problem -- most of them are having a tough time just staying above water. However, I am interested in the role that these VC companies are playing -- they are sort of a breeding ground for conversation among vendors and users. I'll write more about that in part 2, but I think the investment community is a fascinating, and largely untapped, resource for the community.
Lorna Garey
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Lorna Garey,
 User Rank: Ninja
4/24/2014 | 5:31:18 PM
Re: Lighthouse Clients Are Pure Gold
Tim, do you think these VCs could encourage the data sharing that's so pitifully lacking among big security vendors today? I get that intel on a new threat is seen by marketing as competitive advantage, but a lack of shared intel hurts everyone.
RyanSepe
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RyanSepe,
 User Rank: Ninja
4/24/2014 | 4:48:22 PM
Re: Risk Evaluation
Great point Marilyn. I didn't even think of this from the enterprise perspective. The risk that an enterprise leverages a startup for their services and then they go out of business is tremendous. I would imagine this is why longevity and reputation of different vendors is taken into account when trying to use a solution as well.
Marilyn Cohodas
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Marilyn Cohodas,
 User Rank: Strategist
4/24/2014 | 3:48:10 PM
Re: Risk Evaluation
Fascinating articke and interesting point about risk, Ryan. It makes me wonder how many of these security startups will survive. If this is indeed a paradigm shift for the security industry, will a security startup have a better higher success rate than a typical tech startup? It an even riskier choice for enterprises to partner with a startup than the venture capitalists. 
DarkReadingTim
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DarkReadingTim,
 User Rank: Strategist
4/24/2014 | 3:44:29 PM
Re: Lighthouse Clients Are Pure Gold
Thanks Craig, agreed -- In part 2 next week, I'll discuss some of the ways that enterprises, startups and venture capital firms can work together in ways that are helpful to all three. Thanks for your feedback!
Craig Carpenter, AccessData
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Craig Carpenter, AccessData,
 User Rank: Apprentice
4/24/2014 | 3:39:04 PM
Lighthouse Clients Are Pure Gold
Nice article Tim, I think you nailed it.  The market is definitely a fun and exciting place to be right now, mostly because customer pain points are real and new and exciting technology is emerging to address them.

Of everything you wrote, THE most important point you made for any startup was about lighthouse clients.  With them, a startup can do anything, including conquer the world; without them, all you have is a nice story and vaporware as far as the market is concerned.  So treat lighthouse clients like gold - because that's exactly what they are.
RyanSepe
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RyanSepe,
 User Rank: Ninja
4/24/2014 | 2:59:41 PM
Risk Evaluation
Great article. I think this really displays the business perspective behind security. It offered many points that startup companies should heed if they hope to become a larger entity. However, there is much risk involved from a business standpoint. For example, you have a dream and the ability to carry out this dream based in your knowledge of security. You have people who know the landscape and believe in your vision work with you. This is a very vanilla means of describing what is needed for a startup, but even if you have all the right components in place, there is no guarantee for funding. Its at this point when you could possibly be in debt from trying to launch your endeavor from the ground. I suppose again its all an evaluation of risk. Any thoughts on this analysis? What is to be said for the companies that go above and beyond and for whatever reason come up short? I think advice needs to be given not only from a positive standpoint like in the article but also to limit financial/business related risk.


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