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A $150 Million Dollar Cybersecurity Rocket Launcher

By September 14, 2015Article

Allegis Capital says investing in cybersecurity isn’t for newcomers. And Allegis is no newbie to security. 

If you haven’t heard of Allegis, then hear this: they recently closed on $100 million for a fund that is investing into cybersecurity startups. The Wall Street Journal reported that the fund’s target is about $150 million. That’s some serious rocket fuel about to be poured into young cybersecurity companies. 

Based in Palo Alto, Calif., Allegis Capital is a VC firm that invests in early-stage, large-market opportunity cyber businesses. 

One of Allegis’ target markets is IoT security. The Internet of Things security market is expected to grow from $6.89 billion in 2015 to $28.90 billion by 2020, according to a report from Markets and Markets. Research and advisory firm Technavio’s analysts forecast the global IoT security market to grow at a CAGR of nearly 55 percent over the period 2014 to 2019. 

Another target market for the firm is security analytics, a market expected to be worth $3.22 billion globally by 2018, according to Markets and Markets. There’s a lot of headroom for growth in the big data and analytics market, which will reach $125 billion worldwide in 2015, according to research firm IDC. Big data analytics tools have emerged as the first line of defense for protecting corporate networks. 

Some recent deal activity tracked by Cybersecurity Ventures’ Q3 2015 Cybersecurity Market Report explains where some of Allegis’ hundred mil has gone: 

  1. E8 Security (Redwood City, Calif.), provider of cybersecurity analytics solutions to help enterprises detect and manage malicious insider threats and targeted cyberattacks, closed $9.8 million in Series A funding led by March Capital Partners, with participation from Allegis Capital and The Hive. The funding will be allocated to further product development, currently in private beta with several large domestic and international organizations and expand the organization’s engineering and development teams.
  2. RedOwl (San Francisco, Calif.), a leader in insider risk management and security analytics, raised $17 million in Series B funding led by Allegis Capital. The company will use the new funds to continue its expansion, further build out the product development and data science teams and begin broadening its go-to-market efforts.
  3. Signifyd (San Jose, Calif.), the fastest-growing provider of fraud protection for e-commerce businesses, raised $7 million in a Series A round of financing led by Allegis Capital with participation from Resolute Ventures, IA Ventures, QED Investors, Lucas Ventures and Tekton Ventures. This brings the company’s total funding to $11.2 million since its founding by two PayPal veterans.

While the $100 million fund is big news, Allegis has been investing into cybersecurity and tech startups since 1999.  

Bob Ackerman is the managing director and founder of Allegis Capital. A former entrepreneur himself, Bob was the founder and chairman of InfoGear Technology Corporation, a pioneer in the original integration of Web and telephony technology and creator of the original iPhone. 

Cybersecurity startups should be looking for “smart money,” not just any money. Allegis’ money has a lot of intellectual firepower along with it. Its investments are backed by Ackerman, his managing directors who have years of experience investing in early-stage cyber, big data and IoT companies and Allegis’ venture partners who work for the biggest names in the business including Google, Cisco, FireEye and VMware.  

Cybersecurity is a hot space and there are a lot of angels and investors looking to get in the game … which means a lot of low-hanging money for aspiring cyberpreneurs. But to really launch big and shoot into cyberspace where companies are on the radar screens of analysts, the media, and the security buying community, it takes a VC that has been there and done that. Allegis has. 

Steve Morgan is founder and CEO at Cybersecurity Ventures and editor-in-chief of the Cybersecurity Market Report and the Cybersecurity 500 list of the world’s hottest and most innovative cybersecurity companies. Follow Steve on Twitter or connect with him on LinkedIn.