Cyber security money men

1/22/2014 Cybersecurity's Money Men - The Information
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P R O F I L E S
Cybersecurity's Money Men
By Katie Benner
Jan. 21, 2014
08:01 AM PST
https://www.theinformation.com/cybersecuritys-money-men 1/14

Mounting data and national security threats have transformed cybersecurity
investing from a relative backwater into a robust field in which public offerings
can provide a handsome return.
Companies that predict when and where hackers will attack and ward them off—
including FireEye, Barracuda Networks, AVG, Proofpoint, Qualys and Palo Alto
Networks—went public within the last two years. There were 62 cybersecurity
acquisitions or IPOs in 2013 and 99 in 2012, according to research firm CB
Insights.
But investing in cybersecurity companies, whose success can depend heavily on
landing key government or corporate contracts, isn’t for the uninitiated.
The Information identified the grizzled veterans who have watched companies’
privacy and security needs grow over the last several years as attacks have
become increasingly sophisticated and more publicized. A recent spate of data
security breaches at retailers like Target and Neiman Marcus rattled consumers.
The role of technology in national security is also being hotly debated publicly
amid revelations of controversial National Security Agency data-collection
programs.
These investors have become go-to players for entrepreneurs on account of two
traits. Many were operators of security companies themselves and have built ties
with software giants like Cisco Systems, Intel and the financial services firms that
need cutting-edge security. They have also forged relationships with the
government agencies that are responsible for keeping the country safe, including
the Department of Defense, the National Security Agency, the Department of
Homeland Security and the Central Intelligence Agency.
We interviewed entrepreneurs, software executives and sources with close ties to
Washington to identify Silicon Valley’s most influential cybersecurity investors.
Most of them gave us their take on the industry and talked about investments and
exits of note. A forthcoming second installment will look at prominent investors
in Washington, angel investors and some up-and-comers.

Ted Schlein
General partner, Kleiner Perkins Caufield & Byers
Age: 49
Recent security investments: Shape Security, which makes software to defend
against automated attacks; Ionic Security, a cloud and mobility security platform;
Endgame, data analytics to anticipate attacks; Synack, crowdsourced security.
Big exits: Mandiant, a cyber forensics firm, was sold to FireEye last December for
more than $1 billion. 41st Parameter, a fraud detection company, was sold to
Experian for $324 million last October.
Percent of the fund currently in security, by value: Undisclosed
Key Connections: Mr. Schlein serves on the board of In-Q-Tel, the venture capital
arm of the Central Intelligence Agency. He’s also on a board with Ex-National
Security Agency director Lieutenant General Kenneth A. Minihan.
Background: Mr. Schlein is regarded as one of Silicon Valley’s most-influential
cybersecurity investors. He began his career at Symantec in 1986, where he
released the first commercial antivirus software. A decade later he joined Kleiner
Perkins, where his first investment was Internet Security Systems, later acquired
by IBM. He incubated a company called Fortify Software that was sold to Hewlett-
Packard for $300 million in 2010.
Boards: AlienVault, LifeLock, 41st Parameter, Synack and Mandiant.

Looking ahead: Mr. Schlein has watched companies get more proactive about
cybersecurity. “You’re seeing the mental shift away from prevention to the idea
that now everyone will be breached,” he says. “Breach monitoring and
remediation software will be the new anti-virus.”
David Cowan
Partner, Bessemer Venture Partners
Age: 48
Recent security investments: IID, threat detection; ThreatTrack, targeted attack
protection; Mojave Networks, cloud-based mobile security.
Big exits: Qualys, a cloud security company that went public in 2012 and has a
$919 million market capitalization, and LifeLock, an identity theft company that
went public in 2012 and has a $1.7 billion market cap.
Percent of the fund currently in security deals: 13%
Key connections: Sits on boards with Tom Ridge, former secretary of Homeland
Security, and Lt. General David Deptula, former deputy chief of staff for
intelligence, surveillance and reconnaissance with the U.S. Air Force.
Background: In 1995, Mr. Cowan co-founded Verisign, a spinout of security giant
RSA. He tends to be an early investor and has put money to work in security play
Tumbleweed, which went public in 1999 and later acquired two other Bessemer
portfolio companies.

Boards: Postini, Cyota, Nominum, Endgame and Defense.net.
Looking ahead: Mr. Cowan says he’s worried that cybersecurity investing is
getting more crowded and that there are talent shortages. “I want to make
investments in a brand new space at an early stage where there’s less
competition,” he says. One idea he finds interesting is real-time intelligence
sharing, where companies and governments pay to be part of an information
exchange.
Asheem Chandna
Partner, Greylock Partners
Age: 49
Recent security investments: SkyHigh Networks, cloud security and encryption.
Big exits: Palo Alto Networks, a subscription security platform that includes
advanced threat protection, went public in 2012 and now has a $4.6 billion
market capitalization.
Percent of the fund currently in security deals: 25% of enterprise deals
Key connections: Shlomo Kramer, co-founder of Check Point Software and a
prominent angel investor in security software; Alan Paller, founder of SANS
Institute, a cybersecurity training school.
Background: Mr. Chandna has a long operations résumé that includes stints at

Background: Mr. Chandna has a long operations résumé that includes stints at
AT&T Bell Labs and Compuware. But it’s his six-plus years at Check Point Software
that have paid obvious career dividends. At Greylock he incubated Palo Alto
Networks with his former colleague Nir Zuk, Check Point’s co-founder and CTO.
Boards: Palo Alto Networks
Looking ahead: VCs aren’t the only investors getting into the security space,
according to Mr. Chandna. “Lots of large corporations—including General Electric,
J.P. Morgan and Goldman Sachs—are interested in investing in private
companies,” he says.
Promod Haque
Senior managing partner, Norwest Venture Partners
Age: 65
Recent security investments: Apprity, cloud security
Big exits: FireEye, which went public last September and has a $8.9 billion market
capitalization, and 41st Parameter.
Key connections: He sits on boards with Robert Lentz, former chief information
security officer at the Department of Defense, and Enrique Salem, ex-CEO of
Symantec.
Background: In 2005, Mr. Haque became one of the earliest investors in the anti-

Background: In 2005, Mr. Haque became one of the earliest investors in the anti-malware
company FireEye alongside Gaurav Garg, formerly of Sequoia Capital.
That same year he made a first round investment in 41st Parameter. Norwest
owns about 20 million shares of FireEye that are worth about $1.3 billion.
Boards: Virtela, FireEye
Looking ahead: Mr. Haque believes startups have an opportunity to displace the
currently sprawled-out network of traditional security software vendors. “Full
platform security vendors are emerging, like FireEye and Palo Alto Networks, and
platform will be the successful business models going forward.”
Michael Biggee and Alberto Yepez
Managing directors, Trident Capital
Ages: Mr. Biggee, 37; Mr. Yepez, 54
Recent investments: AlienVault, all-in-one security solutions; Mocana, mobile
app security.
Big exits: Solera, a security analytics and forensics company that was sold to Blue
Coat Systems last May, and Qualys.
Percent of the current fund in security deals: More than 25%
Key connections: They serve on boards with General Peter Pace, former chairman
of the Joint Chiefs of Staff, and Howard Schmidt, former White House cyber
coordinator.

Background: Mr. Biggee, a former Merrill Lynch banker, joined in 2005 to help
Trident expand in security investing. The firm has made nine security
investments and had six exits since he joined. He’s on the board of Voltage
Security and was on the board of Arxan Technologies.
Mr. Yepez spent 10 years at Apple, where his roles included manager of the Mac
technology group and the enterprise systems division. He spent two and a half
years building Oracle’s security and identity business and was an angel investor in
Securent, a data security company acquired by Cisco. He joined Trident in 2008.
Boards: AlienVault, Mocana and Neohapsis.
Looking ahead: The increased importance placed on IT security means that
businesses are hunting for more board directors with security experience. “Just as
companies began to seek out CFOs that understood Sarbanes-Oxley, global
corporations are going to add cybersecurity expertise at the board level to deal
with threats and liability,” Mr. Yepez says.
Gaurav Garg
Co-founder and managing director, Wing Venture Partners
Age: 48
Recent security investments: Apprity, Shape Security and Synack.
Big exits: FireEye.

Key connections: He sits on boards with Sumit Agarwal, a former deputy assistant
secretary at the Department of Defense, and former NSA official Robert Lentz.
Background: Among his earliest cybersecurity investments was NetScaler in 2003
while he worked for Sequoia Capital. Citrix Systems bought the company for $325
million in 2005. Mr. Garg championed Sequoia’s investment in FireEye in 2004. In
2008, he led Sequoia’s investment in MobileIron, which provides mobile
management and security solutions.
Boards: MobileIron, Shape Security.
Looking ahead: Mr. Garg says that the evolution in security systems will drive
large amounts of corporate spending. "This decade, we'll continue to witness the
breakneck movement of security infrastructure from behind the walls of the
enterprise,” he says. “In lockstep, massive budgets will shift."
Bob Ackerman
Managing director and founder, Allegis Capital
Age: 57
Recent security investments: Bracket Computing, cloud security; Shape Security
and Synack.
Big exit: IronPort Systems, which protects organizations against spam, viruses
and malware. Cisco acquired it in 2007 for $830 million.

Key connections: Was an advisor with the Defense Department’s Defense Venture
Catalyst Initiative. Venture capitalists serve two-year stints with the program and
identify companies and technology that could be useful to the agency.
Background: Mr. Ackerman has long put money to work in privacy and security.
His first foray into the space was in 1999 with a seed investment in the privacy
software company Privada. In 2006 he worked with Advanced Technology
Ventures to fund Apprion, a provider of secure wireless communications
infrastructure. He was also an early investor in and director of Solera Networks,
which was sold to Blue Coat Systems last May.
Boards: Apprion
Looking ahead: “CPU speeds, network speeds and storage availability have long
placed limits on what we can and can’t do in technology,” Mr. Ackerman says.
“Cybersecurity is now the fourth determinant.”
Venky Ganesan
Managing director, Menlo Ventures
Age: 40
Recent security investments: BitSight, data analysis to identify and quantify
security risk.
Big exits: Palo Alto Networks.

Key connections: As a member of the National Venture Capital Association’s
board, he works with venture industry lobbyists and regulators.
Background: Before joining Menlo Ventures last year, Mr. Ganesan invested in
security-related companies during a 14-year stint at Globespan Capital Partners.
There he invested in Palo Alto Networks and he worked on a 2004 investment in
Q1 Labs, which was acquired by International Business Machines.
Before he was an investor, Mr. Ganesan co-founded and sold Trigo, a software
company for manufacturers and distributors, and forged deep ties with strategic
acquirers. IBM, Oracle, NetApp, Google and Cisco have all bought or invested in
his portfolio companies.
Looking ahead: He thinks companies will face pressure to beef up on
cybersecurity because consumers and corporations won’t want to do business
with them if they are vulnerable to attacks.
Jim Goetz
General partner, Sequoia Capital
Age: 48
Recent security investments: SkyHigh Networks.
Big exits: Barracuda Networks, a cloud security company that went public last
November and has a $1.8 billion market cap, and Palo Alto Networks.
Percent of the fund currently in security, by value: 10%

Key Connections: Mr. Goetz is a board member alongside William Jenkins, an ex-
EMC executive, and Mark McLaughlin, the former CEO of Verisign who served on
President Barack Obama’s National Security Telecommunications Advisory
Committee.
Background: Sequoia has been active in the cybersecurity space for decades,
making investments in hot names like Bit9 and Blue Coat. Since joining in 2004,
Mr. Goetz was involved in important deals including Palo Alto Networks and
Barracuda Networks.
Boards: Palo Alto Networks and Barracuda Networks.
Looking ahead: The threat that Mr. Goetz finds most alarming is the proliferation
of government-sponsored cyber attacks, and he’s looking at next-generation
firewalls that can defend against increasingly sophisticated offensives.
Venky Ganesan works at Menlo Ventures. An earlier version of this story
incorrectly said that he works at Menlo Venture Capital.
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