London Calling, released in 1979 by the British punk rock band The Clash, was ranked as one of the greatest rock albums of all time. Its lead single by the same name was a certified top-20 single hit. London Calling is an apocalyptic song, detailing the many ways the world could end, including the coming of the ice age, starvation and war. Today, the big threat that has everyone on edge is cyber war. There’s a VC firm in Zurich, Switzerland, that may want to adopt some of the song’s lyrics, like the tune suggested below, and match it to its recent press release.
Zurich calling to the Americans and British
Now cyberwar is declared and hacks come down
Zurich calling to the digital defenders
Come out with your startups, you boys and girls
It has the potential to become a top hit with U.S. and U.K. cybersecurity startups.
A few weeks ago, the investors at Evolution Equity Partners announced the first close of The Evolution Technology Fund L.P. focused on growth-stage investments in cybersecurity and next-generation enterprise software and services in the U.S. and Europe. Evolution secured $70 million in commitments with an ultimate target of $125 million for the Fund. The Fund’s first two investments are in high-growth cybersecurity companies: SecurityScorecard (New York, N.Y.) and Onapsis (Boston, Mass.).
So why would a VC firm with all that cash need a song? The cyber investing landscape is very competitive right now. Several funds aimed at cybersecurity startups recently launched, and the more experienced tech VCs have set their sights on the cyber sector, -which is expected to grow from $77 billion in 2015 to $170 billion in 2020, according to Cybersecurity Ventures’ Q3 2015 Cybersecurity Market Report. Flush with new cash, an investor needs to get word out to the hottest cyber firms that are often founded by young entrepreneurs.
A recent Techworld article stated that according to the Cybersecurity 500 (a list of the world’s hottest and most innovative cybersecurity companies), London is now the seventh biggest city in the world for cybersecurity businesses, behind a clutch of Californian (e.g., San Francisco, San Jose, Mountain View, Sunnyvale) and U.S. (New York, Austin) cities.
Evolution Equity Partners has a great song to sing to the burgeoning cyber startup communities in the U.S., U.K. and the rest of Europe. It was founded by investor and technology entrepreneurs Richard Seewald and Dennis Smith; J.R. Smith, former CEO of AVG Technologies and cybersecurity expert and author (“Wide Open Privacy: Strategies for the Digital Life” and “Cybermilitia: A Citizen Strategy to Fight, Win, and End War In Cyberspace”); and Karel Obluk, former chief scientist, CTO and architect of the technology platform at AVG Technologies that today has over 200 million users worldwide.
The firm’s current and past portfolio companies include AVG Technologies (Amsterdam, The Netherlands), one of the largest security software exits in terms of market capitalization at IPO; Cognitive Security (Prague, Czech Republic), which was acquired by Cisco; and OpenDNS (San Francisco, Calif.), also acquired by Cisco, one of the largest security exits in 2015.
In a recent Reuters story, Richard Seewald explains the target investments for Evolution Equity Partners. “We are looking at companies… where revenue growth is accelerating and early stage risk has dissipated,” Seewald said. “Often those companies are … at a point where they have been growing rapidly over the last three to five years, raised money from top-flight U.S. venture capital funds and are looking now to go international.” If a cybersecurity company already has close ties to top-flight U.S. VCs, then Seewald’s firm needs to get on their radar pretty quickly. The same is true of many British cyber firms that already have strong VC backing.
In a SandHill story last week, I reported Trident Capital spun off Trident Capital Cybersecurity, which, according to a regulatory filing in July, is raising a $200 million fund to invest into promising cyberpreneurs. A couple of weeks earlier, I reported Allegis Capital 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.
Then there are the corporate investors. CB Insights states that over the last five years, corporate venture arms invested nearly $1.3 billion into cybersecurity companies, spanning 135 deals. In Q2 2015, the corporate investors participated in 17 deals. Google Ventures and Intel Capital are the top two investors in this group, and they are also the only two in the top 10 of all cybersecurity investors when you include VC firms that invest in the space.
Stay tuned. We’ll report back in Q1 2016 on which cyber companies Evolution Equity Partners and the other funds have invested into.
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.