Author: AllegisCap

WSJ | Palantir and Investors Spar Over How to Cash In

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Data-mining company has no interest in IPO, but employees and co-founders are trying to sell shares

palantirlogoPalantir Technologies Inc. is one of the world’s most valuable private companies but has no interest in going public. Some of its earliest investors, employees and even Palantir co-founders are trying to cash in anyway.

 

Their moves reflect a deepening rift in Silicon Valley between private companies that want to stay that way and investors who want to unlock at least some of the profits from their most successful investments.

 

Investment firms launched by Peter Thiel, a Palantir co-founder and chairman, are seeking to sell more than $100 million of their shares in the Palo Alto, Calif., data-mining company, say stockbrokers and venture capitalists.

 

Another co-founder, Joe Lonsdale, has urged Mr. Thiel to create a large “special-purpose vehicle” to help facilitate employee and investor stock sales.

 

And some former and current Palantir employees have tried to bundle their tiny stakes in the company into blocks that likely would be easier to sell in the opaque, ad hoc market for shares of closely held technology companies.

 

Some investors in Palantir and other private companies are worried their money could wind up marooned in firms with no exit strategy. Some firms have grown more leery about going public because of the chilly market for tech-related initial public offeringsand concerns about sky-high valuations.

 

Many of the fastest-growing tech firms already were reluctant about doing an IPObecause venture capital has been abundant and private companies are bound by less regulatory red tape than those that go public.

 

palantirPalantir was valued at $20 billion in a funding round earlier this year, trailing only Uber Technologies Inc., Xiaomi Corp. and Airbnb Inc. among venture-backed private companies. Palantir has raised money from investors at least 12 times for a total of $1.9 billion since its start in 2004, according to Dow Jones VentureSource.

 

The company is best known for its software that lets government agencies such as the Central Intelligence Agency and Federal Bureau of Investigation quickly visualize relationships among large amounts of data.

 

Palantir’s technology crunches bank records, phone numbers, friend lists, license-plate photos and other records. Palantir recently has pushed deeper into the private sector, where the company’s customers include banks, oil and gas companies, and chocolate maker Hershey Co.

 

Palantir has said privately that its bookings, which measure the size of customer contracts, grew to roughly $1.1 billion in 2014 from about $30 million in 2009, an annual growth rate of 107%.

 

Despite the surge, though, Palantir repeatedly has said that it has no plans for an initial public offering.

 

“I’m committed to Palantir for the long term, and I’ve advised the company to remain private for as long as it can,” said Mr. Thiel, a billionaire who also helped start PayPalPalantir’s chief executive, Alex Karp, wouldn’t comment.

 

Messrs. Thiel and Karp were classmates at Stanford University who formed Palantir after envisioning a data-driven strategy to tackle security risks in the wake of the Sept. 11, 2001, terrorist attacks.

 

Palantir is unusual among tech companies for having long tried to relieve some of the pressure from investors by helping them sell limited quantities of stock. An executive at Palantir even acts as a broker of the company’s shares.

 

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SC Magazine | On deck: Predictions for 2016 and beyond

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What’s to come in the cyber universe in 2016 and beyond? What threats will be most challenging for security pros? We compiled predictions from a number of experts.

 

Bob Ackerman, managing director and founder, Allegis Capital

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Data analytics. Whether we are looking at threat intelligence or insider behavior, which contributes to 40 to 75 percent of all breaches, data analytics will continue to be a major innovation and investment theme. There is no shortage of data, it’s finding the specific piece of hay in the haystack – not just the needle in the haystack – that is essential for the security practitioner.

 

Autonomic defense. The explosion in volume and quality of threat intelligence and the chronic shortage of threat analysts will drive the demand for automated response systems for cybersecurity. We need to automate the rudimentary threat responses and for all management to focus scare threat analyst resources on the most complex and critical threats. Essentially, it’s all about scale and velocity.

 

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A ‘Golden Key’ to Unlock Encryption Is the Wrong Approach

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RSA Conference

 

This post in our VC-series comes from Robert R. Ackerman, Jr., the founder and managing director of Allegis Capital.

 

It seems like an appealing strategy—give the FBI and other law enforcement agencies, as well as our spy organizations, a back door— a “golden key”—to unveil encrypted communications to help catch criminals and terrorists and protect Americans from harm. This is particularly compelling in the wake of the recent terrorist attacks in Paris and the role of Islamic State propaganda in the mass killings in San Bernardino, Calif., the worst homeland terrorist episode since 9/11.

 

golden keyWhen Islamic State commanders find a recruit willing to die for the cause, they move their communications over to encrypted platforms, “going dark,” FBI Director James Comey has said. He has also pointed out that Islamic State militants and other terrorist groups could use encryption to “recruit troubled Americans to kill people” in the homeland.

 

These are scary points, but a golden key won’t help resolve them. The unvarnished truth is that it is a fictitious panacea, one analogous to fool’s gold.

 

In the domain of cybersecurity and encryption, the bad guys are just as smart as the good guys. Their tradecraft is focused on identifying and exploiting vulnerabilities. If there is a back door, they will find it and exploit it.  At the same time, it’s hard to imagine that government agencies, which are regularly breached, could be trusted to keep such a golden key safe from hackers and criminals.

 

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…often stays in Vegas. But not this time!

  |   Portfolio News

We just came back from the AWS Re:invent conference in Vegas.  The show has been excellent for us.  Overall we see increasing enterprise interest in cloud and AWS.  And AWS continues to impress with the breadth of their offering.  The show felt very centered around AWS as an Enterprise PaaS vendor with new platforms, database and analytics offerings. For Bracket, the highlight was clearly an event we held with Don Duet from Goldman Sachs.  The topic was “Blue print for the data center of the future”.  It was a fireside chat with Don and I.  We had 125  customers and prospects in the room.

Don was amazing.  Shared his vision for the data center of the future and how Bracket plays a critical role.  We talked for about 45 minutes then opened it for questions.  There were tons of questions – way more then we could answer which is a great sign.  That seminar has had a ripple effect – we are starting to hear other customers tell us they talked to Goldman.  It’s also notable that while 125 people came to the event, we probably invited several hundred people live at the show and thousands by email.  Even those that don’t come make the association of Goldman and Bracket.  That’s powerful marketing!

We had a suite for customer briefings and it was full constantly – we had to use Chris Pappas’ hotel room room for overflow meetings a few times.  The interest level seems higher then ever.  The new Bracket software edition was particularly well received because folks that are at the show are already on the AWS platform so having an easy add-on for world-class security and data management sounds appealing.  We got several new software beta candidates, plus we are building up our sales pipeline.

We have been working hard at getting the word out about this vision for the new data center.  The attached press release announcing our series C funding is an excellent vehicle for that.  It will hit the wire tomorrow.

Thanks all for the support!

More to come…

Tom Gillis

Allegis Capital Venture Partner / Founder and CEO, Bracket Computing

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A $150 Million Dollar Cybersecurity Rocket Launcher

  |   Allegis News

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

 

by Steve Morgan, Founder & CEO Cybersecurity Ventures, Sandhill.com – Sept 14, 2015 – 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.

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Experience Matters for Security Startups – Venture Capital Series Part 3

  |   Allegis News

Vic Wheatman Speaks with Robert Ackerman of Allegis Capital

The level of venture capital financing has hit new heights with increasing investments in information security. Some venture capitalists (VCs) specialize in finding and funding startups in security, which is a unique segment within technology. What does this mean for security startups? And how does an investor’s perspective impact Chief Information Security Officers?

In part one of a three-part series, Security Current’s Vic Wheatman speaks with Robert Ackerman, founder and managing director of Allegis Capital about the current state of VC funding and the burgeoning security field.

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Experience Matters for Security Startups – Venture Capital Series Part 2

  |   Allegis News

Vic Wheatman Speaks with Robert Ackerman of Allegis Capital

The level of venture capital financing has hit new heights with increasing investments in information security. Some venture capitalists (VCs) specialize in finding and funding startups in security, which is a unique segment within technology. What does this mean for security startups? And how does an investor’s perspective impact Chief Information Security Officers?

In part one of a three-part series, Security Current’s Vic Wheatman speaks with Robert Ackerman, founder and managing director of Allegis Capital about the current state of VC funding and the burgeoning security field.

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Allegis Capital Adds Two More Cybersecurity Industry Experts John Stewart, CISCO’s SVP Chief Security & Trust Officer & Joe Levy CTO of Sophos Are Named Venture Partners.

  |   Allegis News

Early Stage Cyber Security Focused Firm Now Has 8 Venture Partners.

 

PALO ALTO, Calif. (August 17, 2015) – John Stewart, the leader of Cisco Systems’ Security and Trust Organization, and Joe Levy, chief technology officer of Sophos, a developer of computer security software and hardware, have been named as venture partners at Allegis Capital the firm announced today. Stewart, and Levy, are two of eight venture partners at Allegis, which focuses on investments in early-stage cybersecurity companies. Stewart is on the board of Allegis portfolio company Shape Security and previously was an executive at Allegis portfolio company SandPiper/Digital Island. Levy was previously the chief technology officer of Allegis portfolio company Solera Networks.

Stewart and Levy add additional strength to an already strong team of venture partners, said Robert Ackerman, founder and managing director of Allegis Capital. They have worked with Allegis in one capacity or another for years and have deep technology, market and operating expertise, as well as long histories in cyber security.

“John and Joe are two proven veterans in cyber security and their experience will not only reinforce our strength in cyber security investing but will be invaluable to our firm and help us better serve our entrepreneurs,” Ackerman said. “They know the cyber security landscape well and will give our portfolio companies both strategic guidance and business execution if need be. They are deeply connected and have unmatched insights,” Ackerman added.

Stewart and Levy Backgrounds

John Stewart formed and leads Cisco’s Security and Trust Organization, underscoring Cisco’s commitment to address two of the most critical issues that are top of mind for boardrooms and world leaders alike. Supplementing his role at Cisco, Stewart sits on technical advisory boards for Area 1 Security (also an Allegis portfolio company), BlackStratus, and Threatstream. In addition to Shape Security, he is a member of the board of directors at Shadow Networks and the National Cyber-Forensics Training Alliance (NCFTA). He also serves as a special advisor to Redseal’s board of directors. Additionally, Stewart serves on the Australian Department of the Prime Minister and Cabinet Cyber Security Review panel and on the Cybersecurity Think Tank at University of Maryland University College. Stewart also served on the CSIS Commission on Cybersecurity for the 44th United States Presidency. Most recently, he was recognized with the RSA 2015 award for Excellence in Security.

Levy, who has more than 20 years of leadership and development expertise in information security, joined Sophos as chief technology officer in February 2015. Prior to Sophos, Joe was CTO for Blue Coat Systems, and, before that, CTO of Solera Networks. Prior to Solera, Joe was CTO of SonicWall, where he led research and development teams in next-generation firewalls, deep packet inspection, cryptography and secure remote access. Earlier in his career, Joe worked with OneNet. Levy holds several security, networking database and virtualization patents. He has also co-authored a book on wireless network security.

Levy and Stewart Join Six Other Allegis Venture Partners

The other venture partners at Allegis are Nawaf Bitar, senior vice president of VMware and general manager of its cloud platform business unit; Hossein Eslambolchi, founder, chairman and CEO of Cyberflow Analytics; Tom Gillis, founder and CEO of Bracket Computing; Todd Rowe, managing director of global channel sales at Google; Jeff Williams, vice president of worldwide sales and business development at FireEye, and Jean-Louis Gassée, a long-time Allegis partner and founder of Be Inc., the creator of the BeOS computer operating system.

About Allegis Capital

Allegis Capital is a seed and early-stage venture capital investor in companies building disruptive and innovative cyber security solutions for the global digital economy. Founded in 1996, the firm has more than $700 million in capital under management and has been active in cyber security investing since 2000. Its cyber security portfolio includes: Area 1 Security, Bracket Computing, E8 Security, Red Owl Analytics, Platfora, Shape Security, Signifyd, Synack and vArmour.  

Contact: Jennifer Jones 650-465-5831 jennifer@jenniferjones.com or Steve Kaufman 352-633-3716 steve.kaufman@centurylink.net

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Experience Matters for Security Startups – Venture Capital Series Part 1

  |   Allegis News

Vic Wheatman Speaks with Robert Ackerman of Allegis Capital

The level of venture capital financing has hit new heights with increasing investments in information security. Some venture capitalists (VCs) specialize in finding and funding startups in security, which is a unique segment within technology. What does this mean for security startups? And how does an investor’s perspective impact Chief Information Security Officers?

In part one of a three-part series, Security Current’s Vic Wheatman speaks with Robert Ackerman, founder and managing director of Allegis Capital about the current state of VC funding and the burgeoning security field.

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Sage and eFileCabinet Partner to Offer Accountants One Comprehensive Business Management Platform

  |   Portfolio News

Sage Summit – NEW ORLEANS (July 28, 2015) – Sage, a leading provider of business management software and services to Small & Medium Businesses, today announced it is partnering with eFileCabinet, the leading hosted electronic document management (EDM) solutions provider, to help accountants move away from the time-consuming and costly processes of manually scanning, storing, managing and sharing records and documents.

The partnership will enable users of Sage Impact cloud-based platform to sign up for and use the eFileCabinet cloud document management solution from within the Sage Impact dashboard.

Sage Impact is the accountants’ everyday business management platform and go-to for access to payroll, accounting, financial management, business intelligence, community, new business leads and more, all managed in one central hub. More than 150,000 users worldwide rely on eFileCabinet document management solutions to provide simple but effective document management solutions. eFileCabinet’s document management solutions are designed to help organizations capture, manage and protect their data regardless of industry.

“Partnering with eFileCabinet will provide our users with a secure document management system that will enable them to be more productive, save and free up time to focus on profitability and their clients,” said Jennifer Warawa, global vice president of product marketing for accountants at Sage.

“Our recent research has shown that nearly one in five firms view cloud document management as being a tool that would significantly improve management of their firm; yet more than 20% feel as though their needs aren’t being addressed today,” added Warawa. “We recognize the importance of meeting the needs of accountants by either creating those solutions ourselves or through strategic partnerships, and in this case eFileCabinet provides a great solution that will benefit our accountants.”

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