In a strong declaration by the venture capital community that cybercrime is a vicious and unrelenting threat to businesses and consumers, Allegis Capital has raised a $100 million fund to back cybersecurity startups.
San Francisco-based Allegis Capital has for years invested in cybersecurity technology — long before the high-profile Target and Sony hacks — but this time around, cyber will be the predominant recipient of the firm s new fund.
We re all in, Robert Ackerman, Allegis founder and managing director and a nationally known cybersecurity expert, said in an interview. It used to be an important segment, but now it s the whole focus.
Allegis describes cybersecurity as an ever-present, cunning threat, one where the bad actors are brilliant and consistently a step ahead of the gatekeepers. No industry or business is exempt — from retail to health care, banks to the federal government, the reach of cybercriminals has proven to be vast and relentless.
Everywhere there is a vulnerability, there are phenomenally smart engineers on the dark side who are working to exploit those vulnerabilities, Ackerman said. Absolutley every element of information technology structures are under assail, so the breadth of innovation (to combat it) has to be very, very broad.
The growing recognition by CEOs and boards of directors that cybersecurity must be a priority investment, and one they can never take their eye off, is a recent development. After years of not putting a penny into cybersecurity, businesses today have a combined annual budget for cybersecurity investments of about $70 billion — and that number is expected to double.
Had we done this five years ago, people would have said Are you daft?’ Ackerman said. But cybersecurity is no longer an existential threat. People get that it s really important, that the consequences of getting it wrong are really, really serious.
The damage a hacker can do to a company s reputation, operations and bottom line was exemplified in the 2013 Target data breach, which resulted in CEO Gregg Steinhafel, a 35-year employee of the company with the last six at the helm, resigning. Since then, The Home Depot, Sony, Google, Snapchat, Neiman Marcus and JP Morgan are among the many businesses that have suffered financial and reputation damage from a major data breach.
Everyday, someone somewhere in the world is experiencing the cost of a major security breach, Ackerman said.
Ackerman said Allegis will be looking at a much broader spectrum of startups trying to address security vulnerabilities, including those with new technology to secure customer data even when a system is hacked so private information can t be sold on the black market.
Allegis has already made two new investments from the new fund: E8 Security and Signifyd. E8 is developing an advanced threat detection technology, and Signifyd protects online stores by ensuring transactions are legitimate and not a hacking attempt.
Image: A man types on a computer keyboard in Warsaw in this February 28, 2013 illustration file picture. By Reuters/Kacper Pempel/Files
