Author: AllegisCap

Why tech M&A fails so often: The three most common mistakes

  |   Allegis News, The Latest




By Bob Ackerman | November 1, 2016 | PE Hub


It was a failure. That’s what we learned in September about semiconductor giant Intel’s acquisition of antivirus software maker McAfee five years ago. Intel agreed to sell a majority stake in its $7.7 billion acquisition to a private equity firm at a price that showed that McAfee’s assets had increased only marginally, if at all.

There is an important message here.

Far too many technology companies are doing a poor job pursuing acquisitions. Strategic planning is insufficient and integration is largely bungled, and companies usually value acquisitions based on project potential and end up overpaying when that “potential” fails to materialize.


Robert R. Ackerman Jr., founder and managing director, Allegis Capital. Photo courtesy of the firm

A technology company should acquire another only if the acquisition is highly likely to enable or enhance growth prospects indefinitely. Acquirers sometimes say this will be accomplished, but it usually turns out to be a pipe dream.

Most experts say the failure rate of acquisitions is at least 50 percent. Harvard Business Review has estimated it to be 70 percent to 90 percent.

It’s not as though companies decide to pursue an acquisition out of thin air. Their motivation is usually reasonable.

Companies may turn to M&A to embrace a new or emerging market opportunity or, concerned about their deteriorating competitive position, as a means to reinvigorate themselves. In other cases, a company may decide that it is better to buy new technology than to make it, or that it needs an outside company under its wings to enhance its domain expertise. Some acquisitions are sparked by several of these factors.

Too often, however, the strategy is flawed and key tactical steps miss the mark. Companies put on blinders and conclude that their particular deal will somehow buck the negative historical trend.

More often, the result is that the wrong companies are purchased for ultimately an unrealistic reason, and deals are improperly priced. If the marriage doesn’t fail outright, the financial performance of the acquirer declines.

Why deals fail

Even if the right acquisition is made, lots of things tend to go wrong. Corporate cultures clash. Or too much attention is focused on tactics and too little on strategy. Or, in the case of startups, new employees who are unwilling to swap the dream of being a key player in the growth of a successful startup to merely become a cog in a corporate wheel don’t buy into the deal and depart.

Consider another, recent technology acquisition that has looked shaky from the get-go. Microsoft’s purchase in the summer of LinkedIn for more than $26 billion, almost 50 percent more than the value of LinkedIn’s stock. Synergy is lacking. Small wonder given that Microsoft’s M&A track record is weak. It has written down multibillion-dollar purchases of the Nokia handset business and the aQuantive advertising business. And its $8.5 billion purchase of Skype is widely viewed as disappointing.

In many cases, mergers and acquisitions don’t flat out fail. They just underperform. According to an analysis last month of acquisitions by the S&P Global Market Intelligence team, post-deal returns among Russell 3000 companies making significant acquisitions generally did worse than their peers. Profit margins, earnings growth and return on capital all declined, relatively speaking, while interest expense rose as debt soared.

The three most common M&A mistakes

So what happens most often to undermine M&A deals?

  1. Integration is weak. The strategic partnering and business development executives who find companies and negotiate the deals are notthe executives who actually manage the acquisition or integrate the target company. Most of the time, it is the acquirer’s chief technology officer or the operating executive who wanted the acquisition who determine the fate of the startup. The success of an acquisition often depends on whether the acquiring company wants to keep the new company as a standalone division or integrate it into the corporation. Standalone divisions tend to have a better shot at success. The reality, however, is that if a company is being acquired for its intellectual property, typically the case, the usual strategy is to integrate the company and quickly assimilate it.
  2. Executives fail to distinguish between deals that might improve current operations from those that could dramatically improve the company’s growth prospects. Companies then pay the wrong price and integrate the acquisition poorly. A deal designed to boost a company’s performance is generally insufficient to significantly change a company’s growth trajectory. It usually requires something seldom done, working to successfully integrate the acquisition in terms of its business model.

Business models are multifaceted, but their most important component is the resources, such as employees, customers and products, used to deliver customer value. In an ideal case, these resources can be extracted from an acquired company and plugged into the parent’s business model. The problem is that additional business model components, such as the profit formula and business processes such as manufacturing, R&D and sales, are imbedded and generally not transferrable.

  1. Acquisitions don’t have a specific mission and targeted goals. Much more typical is the Microsoft-LinkedIn acquisition, in which the corporate combination simply hopes to improve corporate prospects by scooping up a new business.

M&As that have worked

It’s not impossible for corporate combinations to work. Some have.

One example is Apple’s purchase of chip designer P.A. Semi in 2008. Before then, Apple procured its microprocessors from independent suppliers. But as competition with other smartphone companies increased the importance of battery life, it became imperative for Apple to optimize power consumption by designing processors specifically for its products. Apple had to purchase the technology and talent to develop an in-house chip design capability. Predictably, the combination fared well.

Another successful example was EMC’s acquisition of VMware in 2003. EMC is a manufacturer of hardware storage. Its marriage with VMware substantially strengthened the company’s reach into its customers’ data centers. This merger turned out to be a stunning success.

The bottom line is that executives need to become far more discerning in eyeing potential acquisitions. This is precisely why, Walt Disney Co and Google parent Alphabet Inc recently took a hard look at acquiring Twitter and, in each case, walked away.

Robert R. Ackerman Jr. is founder and managing director of Allegis Capital, a Palo Alto, California-based early-stage venture capital firm specializing in cybersecurity.


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Photo of logos taken in June 2016 when Microsoft announced its $26.2 billion purchase of LinkedIn. Reuters/Dado Ruvic



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vArmour Continues to Drive Data Center and Multi-Cloud Security Innovation through Tripling its Product Patent Portfolio

  |   Portfolio News, The Latest









Recently awarded patents will serve the growing security needs of the modern data center environment


Marketwired | Oct 26, 2016 | 9:00 ET


MOUNTAIN VIEW, CA – vArmour, the leading data center and cloud security company, today announced innovative additions to its patent portfolio issued by the U.S. Patent and Trademark Office. Newly awarded patents focus on segmentation and service chaining in the modern data center.

In its quest to expand data center security for the multi-cloud world, vArmour has aggressively tripled its patent portfolio over the course of the year, from 4 issued and 11 pending in 2015 to 13 issued and 24 pending U.S. patents. The recently awarded and pending patents put further emphasis on service chaining, context aware micro-segmentation and enforcement inside multi-clouds. These innovations help organizations benefit from segmentation and micro-segmentation by reducing attack surfaces, improving compliance, and increasing infrastructure utilization. vArmour’s all-software, subscription model allows customers to integrate new, patented capabilities as soon as they become available, unlike hardware-centric security scenarios where new capabilities can only be realized by buying or refreshing expensive hardware.

“Having spent a career understanding the challenges of securing mission critical data center environments, it has been incredibly exciting to be part of a world class team solving the hard problems in new and completely innovative ways,” said Marc Woolward, CTO at vArmour and a former CTO of Goldman Sachs. From simplifying and scaling security within the cloud to developing cutting-edge ways of service processing on network gateways, our patent work reflects the ingenuity within our team and our determination to protect our intellectual property on behalf of our customers.”

vArmour’s mission is to ensure that data center cloud security is simple, scalable and cost-effective. The awarded patents will serve as strategic components in addressing this mission. As a result, the expanded portfolio will cover:

  • Service chaining – distributed service processing of network gateways using virtual machines
  • Dynamic security insertions into virtualized networks (application of security to network virtualization)
  • Context aware micro-segmentation

“vArmour is an industry-leading innovator with a proven track record in developing flexible, software-driven solutions to meet the needs of today’s enterprise organization,” said John Ferrell, Attorney at Carr & Ferrell, LLP. “With these newly issued patents, vArmour is equipped with the ability to drastically impact the security marketplace and drive strategic change in data center and cloud environments.”

“vArmour operates in a market space undergoing disruptive change in multiple dimensions,” said Peter Christy, Research Director with 451 Research. “First, data center security is replacing the traditional perimeter model to include much needed internal security; second, software-defined overlay networking is being adapted to provide fine-grained micro-segmentation of the data center network, to provide a platform for internal security; and finally, the scale and complexity of modern data centers is dictating that this be architected and implemented as cloud-native technology rather than adapting and reimplementing old software and system architectures. Thus it is likely that innovation and intellectual property will play a key role in this important emerging market.”

About vArmour
vArmour, the data center and cloud security company, delivers software-based segmentation and micro-segmentation to protect critical applications and workloads with the industry’s first distributed security system. Based in Mountain View, CA, the company was founded in 2011 and is backed by top investors including Highland Capital Partners, Menlo Ventures, Columbus Nova Technology Partners, Work-Bench Ventures, Allegis Capital, Redline Capital, and Telstra. The vArmour DSS Distributed Security System is deployed across the world’s largest banks, telecom service providers, government agencies, healthcare providers, and retailers. Partnering with companies including AWS, Cisco, HPE and VMware, vArmour builds security into modern infrastructures with a simple and scalable approach that drives unparalleled agility and operational efficiency. Learn more at

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How to Get a ‘Yes’ From a Venture Capitalist

  |   Entrepreneur Resources, The Latest





Fortune | By Robert R. Ackerman, Jr. | October 26, 2016 | 5:00pm P.T.



Nine tips for improving your odds.


This article is part of Tools of the Trade, a weekly series in which a variety of experts share actionable tips for achieving fast and effective results on everything from productivity to fundraising.

This week, Bob Ackerman explains how entrepreneurs can impress venture capitalists. Ackerman is the founder and managing director of Allegis, an early-stage venture firm that focuses on cybertechnology companies.

Pulling off a successful pitch and actually getting an investment from a venture capital firm is a huge feat. While the pace of venture capital investing remains strong — the second quarter of 2016 marked the 10th consecutive quarter in which VCs invested more than $10 billion — as an entrepreneur, the odds are stacked against you. VCs typically finance only one or two percent of the business plans they see.

Before you begin perfecting your pitch and approaching VC firms, take a moment to determine whether venture capital is the right funding option. VCs typically deploy millions of dollars in a startup and are looking to make several times their investment: 6X to 10X is a good rule of thumb. If your startup doesn’t truly target a huge market with a strong and credible management team, you should consider other sources of funding.

With that in mind, here are nine steps to get you started and improve your odds for getting a VC to bite.

1. Ask yourself the serious questions. Does the market you’re addressing really warrant attention from a VC? Startups always face lots of barriers to entry; is your product or service differentiated enough to overcome these obstacles? If you do raise venture funds, you will likely have to surrender control of your company to your new boss – i.e., your Board, which will now include VCs. Are you comfortable with that? If not, venture capital funding may not be the best route.

2. Make the intangible, tangible. Do as much as you can before showing up to a pitch: incorporate your company, set up your website and domain name, create business cards and, if possible, create a product prototype. This puts you in a better position to raise capital at a higher valuation, particularly if you have a prototype, than if you simply come with an idea.

3. Read their minds. There are certain pieces of information VCs will always want to know. Be ready to address the three types of risk all startups face: market, product and execution. They’ll also want to see customer references.Finally, make sure you can address the technical credibility of your product or service.

4. Research which venture firms you should approach. Most have certain types of companies they like to invest in; make sure your company fits within those parameters. After that, research each firm’s reputation among entrepreneurs. If you can, contact entrepreneurs the VCs have previously funded, and ask if they’d work with the firm again. If not, find out why not (a sour ending to a relationship can say a lot). Also ask how the firm responded when things got tough. All of this will help you determine whether the VC firm can truly “add value,” as well as inject money.

Once you’ve answered all these questions, refine your target list to the best “potential fits”. Broadcasting your plans to venture firms who are not a fit is waste or your time and theirs.

5. Know what makes you unique. It’s important that you present yourself as the expert in the room. Make sure your brief “elevator pitch” is top-notch. Time your presentation:30 minutes for the presentation itself, 10 minutes for a demonstration of your product or service, and 20 minutes to accommodate questions and feedback. Anticipate tough questions. Why does your business need to exist? Why you? Why now? What makes you unique?

6. Get a “warm’ introduction. VCs expect founders to use their social networks to get an introduction at the firm. It demonstrates you know how venture capital works and that you know how to hustle. It also shows us someone we know is willing to go to bat for you. Cold calls go to the bottom of the pile and are never really evaluated.

7. Meet with as many suitable VC firms as possible and target the right partner. Successful fundraising is largely about persistence. In fact, it’s a lot like dating in quest of a soul mate. Don’t just target a firm, target the “right” partner within the firm that will most likely respond to your pitch. Every partner has different investment interests (which you can usually find in their online bios). Target the one most likely to be interested in your company.

8. Be yourself in the meeting. Resist the urge to don a mask of no-nonsense professionalism. Instead, act natural and be yourself. VCs invest not only in ideas, but in people, too.Investors are adept at spotting superficiality. It’s important to be yourself.

9. Remember the dos and don’ts. Do demonstrate how you can counter the competition. Do know your numbers cold.Do overflow with passion and conviction. Do balance boldness with believability. Do listen and engage. Do be honest about your competition and likely challenges (and know how you will overcome both). Don’t be vague. Don’t exaggerate. Don’t name-drop. Don’t talk too much.

In the end, your goal is simple: Land a second meeting. Good luck.

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Jay Kaplan: DFJ Entrepreneurial Thought Leaders Series

  |   Portfolio News

Standford | Events

Wednesday, November 30, 2016

4:30 pm

NVIDIA Auditorium, Huang Engineering Center

Sponsored by:
Stanford Technology Ventures Program, Business Association of Stanford Entrepreneurial Students



Jay Kaplan is co-founder and CEO of Synack, a venture capital-backed startup focused on helping enterprises gain a “hacker” perspective of their technology footprint. Synack was ranked No. 20 on CNBC’s annual list of the “50 Most Disruptive Companies” for the second year in a row.

Prior to Synack, Kaplan served in multiple cyber-related capacities at the Department of Defense, including the agency’s Incident Response and Red Team. Most recently, he was senior analyst at the National Security Agency (NSA), where he supported cyber intelligence operations and received multiple accolades for classified work conducted at the agency.

Selected as one of Forbes‘ “30 Under 30” in enterprise technology, Kaplan holds a B.S. and M.S. from George Washington University studying under a NSA-funded fellowship program, in addition to a number of industry certifications.

The DFJ Entrepreneurial Thought Leaders Seminar series is generously supported by the venture capital firm Draper Fisher Jurvetson.

Wednesday, November 30, 2016
4:30 pm – 5:30 pm
NVIDIA Auditorium, Huang Engineering Center Map
Free and open to the public.

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tCell Closes $9.4M Series A to Secure Cloud-First Organizations Limited By Traditional Network-based Security

  |   Portfolio News, Series A, The Latest

SAN FRANCISCO and WASHINGTON, Oct. 12, 2016 | PRNewswire | Today, at the AppSecUSA conference, tCell announced that it has closed a $9.4M Series A round of financing from Menlo Ventures, A Capital, Allegis Capital, Webb Investment Network, CrunchFund, and SV Angel.

Cloud infrastructures force organizations to re-architect how they do security. Traditionally, security is part of the network (e.g., firewalls, web application firewalls, intrusion prevention systems), and any cloud comes with its own built-in security. The customer’s security has to go into the one thing they own – the app.

tCell enables customers to deploy self-defending apps – giving organizations application visibility and protection, with a simple deployment that embraces DevOps and is completely agnostic to infrastructure – whether it be virtualized, public/private cloud, containers, or anything else.

“We see DevOps and cloud infrastructure impacting everything in IT – including security,” said Mark Siegel, Managing Director at Menlo Ventures. “We believe the information security market is on the cusp of significant change – with value moving from networks to software, and we are acting accordingly.”

tCell also named Steve Mullaney to the board as an independent director, gaining access to Steve’s experience moving infrastructure and security markets from hardware to software at Palo Alto Networks, Nicira, and VMware. “Many of the traditional approaches to security are limited in this new world – faster application deployments, more dynamic applications, and the loss of many of the places we used to put security – like the network,” said Steve Mullaney, director at tCell. “Applications that defend themselves will become the new normal.”

tCell was founded in late 2014 by Michael Feiertag and Boris Chen. Previously, Michael ran products at Blue Coat and Okta, and Boris was VP of Engineering at Splunk.

About tCell:

tCell moves application security out of the network for cloud-first organizations. Using in-application instrumentation and cloud-based analytics, tCell secures production applications, enabling organizations to assess, monitor, and defend their application – without code or network changes. Whether an organizations’ applications are on-premises or cloud-based, tCell’s unique approach makes application security easy.  Learn more at


Article found here:  PRNewswire

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E8 Security, Innovator of Behavior Intelligence for Cybersecurity, Raises $12 Million in Series B Round to Transform Effectiveness of Security Operations

  |   Portfolio News, The Latest


Redwood City, Calif. | October 11, 2016 | 8:00pm E.T. | E8 Security, an innovator of behavioral intelligence for cybersecurity, today announced that it has closed a $12 million Series B funding round. Strategic Cyber Ventures led the round, bringing total funding to date to $21.8 million. All three Series A investors – March Capital Partners, Allegis Capital, and The Hive – also participated in the round. The new funding will be used for continued innovation of the E8 Security Behavioral Intelligence Platform, as well as to fuel go-to-market and sales execution efforts to support the accelerated demand for the platform’s ability to detect the early warning signs associated with potential compromise or unknown security threats.

“Strategic Cyber Ventures is thrilled to add E8 Security to our growing portfolio of disruptive cybersecurity companies,” said Hank Thomas, Chief Operating Officer at Strategic Cyber Ventures. “Based on our many discussions with E8’s executives and customers and hands-on evaluation of their technology, we’re confident E8 will quickly replace a number of cybersecurity controls currently on the market and enhance others that established security teams rely on today. Strategic Cyber Ventures is honored this group of cybersecurity entrepreneurs, with a product that will revolutionize the industry, chose to join our growing portfolio and partner with our team of experts.”

Adversary success rates, and the vast operational damage ripple-effect, continue to soar at all-time highs across all industries and business types. Organizations have come to the stark realization that the significant shortage of skilled IT security professionals, coupled with reliance upon largely siloed, signature-based methods of threat detection, is no longer acceptable. They are now embracing different approaches that incorporate advances in machine learning for cybersecurity and the significant automation benefits that these technologies create and enable.

Indicative of this growing trend, Gartner’s April 2016 “Market Trends: User and Entity Behavior Analytics Expand Their Market Reach”, authored by Eric Ahlm and Avivah Litan, is summarized as “Using analytic sciences to detect a threat is a common theme rippling through various security markets.” In the research note, “Gartner predicts that by 2020, 60% of enterprise information security budgets will be allocated for rapid detection and response approaches, up from less than 20% in 2015.” In addition, “Gartner predicts that the expansion in use cases for UEBA and the need to better respond to found events will both be critical drivers in UEBA market expansion and market collision. Both of these driving forces will follow the model for advanced analytics, specifically along the two analysis functions: descriptive and prescriptive.”

The E8 Security Behavioral Intelligence Platform takes an ‘inside-to-outside’ view, with lateral movement modeling of user and endpoint activities; in addition to network traffic patterns originating from within an organization’s perimeter, in order to identify the various stages of threat activity inside the network. Its self-learning, multi-dimensional behavioral analytics examines all user, endpoint and network activities, and provides a comprehensive view of unknown threat indicators within the organization to eliminate the siloed view of an organization’s security posture.

“As a result of demonstrated motivation, the level of persistence and sophistication, and the unfortunate success rates that the adversaries continue to exhibit in their ongoing efforts to steal a company’s coveted digital assets or disrupt operations, we have hit an inflection point where companies can no longer afford to take the same static approach with regard to detecting threats inside of their networks,” said Bob Ackerman, Founder and Managing Director, Allegis Capital. “We are in complete alignment with E8 Security in our belief that behavioral intelligence must become an integral part of security operations, and that identifying unknown threat indicators through automation and machine learning is the way of the future. We are both excited and proud to extend our commitment to E8 Security.”

“We are very pleased to welcome Strategic Cyber Ventures to the E8 Security family as an investor who joins in our mission of making existing enterprise cybersecurity functions smarter by using behavior intelligence and context to strengthen an organization’s overall security posture,” said Matt Jones, CEO, E8 Security. “We would also like to thank all of our existing investors who continue to embrace our vision and demonstrate it through their expanded commitments in this round of funding.”

For additional information regarding the funding, please visit the E8 Security blog, as well as the Strategic Cyber Ventures blog.

About E8 Security

E8 Security is transforming security operations by dramatically reducing the amount of time it takes to identify unknown cyber threats inside the network. Most organizations spend too much time, and money, investigating alerts that are scattered across multiple management systems, missing the patterns of compromise. Our behavioral intelligence platform can measure an organization’s risk to a data breach and identify the early warnings signs when critical resources are being targeted. In short, we are helping security teams to detect, hunt, and respond by recognizing what is normal in their network so they can quickly respond to what is not. E8 Security is headquartered in Silicon Valley and is funded by Strategic Cyber Ventures, March Capital Partners, Allegis Capital, and The Hive.

For more information, please visit E8 Security and follow E8 Security on LinkedIn, Twitter or visit the company blog.

Article Found Here: 

Doug De Orchis
Voce Communications for E8 Security P: (617) 897-8259

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TMO Background Mode: Interview with Allegis Capital Partner Jean-Louis Gassée

  |   Allegis News, The Latest

By John Martellaro  |  October 3, 2016  |  The Mac Observer’s Background Mode Podcast


jean-louis-gassee-300sqJean-Louis Gassée is currently a V.C. partner with Allegis Capital. He’s best known, however, for taking over the Macintosh division in 1985, his startup of Be Inc. and his highly respected Monday Note, a technical commentary. Jean-Louis tells the story about how, as a precocious youth in Paris he built crystal AM radios and vacuum tubes. Later, after some “interesting jobs,” he joined Hewlett-Packard (France) in 1968 to launch HP’s first desktop computer, the 9100A. Jean-Louis’s success as an electronics geek eventually led to a job at Data General then the lead executive job for Apple France. Jean-Louis then came to the U.S., and his time in Cupertino is legendary. Join me as this computer pioneer chats about Apple and Macs, past and present.







TMO Background Mode: Interview with Allegis Capital Partner Jean-Louis Gassée

Jean-Louis Gassée is currently a V.C. partner with Allegis Capital. He’s best known, however, for taking over the Macintosh division in 1985, his startup of…


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RSA Conference | The Rise of Nation-State Cyber Attacks Makes Encryption More Crucial Than Ever

  |   Allegis News, The Latest


By Robert R. Ackerman Jr | Founder & Managing Director of Allegis Capital


global_security_blogNo entity is immune from a cyber attack. A successful, jaw-dropping cyber assault against a seemingly impenetrable target occurred again last month. This time, the humbled target was the National Security Agency, the nation’s premier electronic eavesdropper. Three hundred megabytes of sophisticated code developed by the NSA to penetrate computer security systems was posted online for all to see. Shortly afterward, the NSA web site went down for almost a full day. In both cases, Russia is the suspected culprit.

Encryption is Crucial

I’ve argued before and today feel even more strongly that ubiquitous, top-flight encryption of data and communications is crucial to a healthy Internet, and that it should be continually strengthened, notwithstanding naysayers who say that law enforcement and other authorities should have a back-door key into systems. I respect the challenges confronting law enforcement, but this particular goal is unacceptable. The United States, its companies and its allies are being breached relentlessly, and the number of high-profile targets is rapidly escalating. We must do everything possible to mitigate this.

Nation-state actors—the world’s best-financed and most sophisticated culprits—have become extremely effective. Even presidential campaigns are being infiltrated, apparently driven by intense interest in how candidates would treat foreign countries and construct trade policies, and in who they would appoint to high-level positions. Campaigns also have lots of sensitive information on donors and internal deliberations.


Nation-State Cyber Attacks

Other prominent and successful nation-state cyber attacks, perpetrated by Russia, China and Iran, include:

  • The recent attack on the Democratic National Committee that stole and posted emails showing that former Democratic National Chairman Debbie Wasserman Schultz undermined Bernie Sanders’ chances of garnering the Democratic presidential nomination—an unprecedented cyber intrusion into national politics.

  • A breach of the Democratic National Committee earlier in the year in pursuit of the email accounts of Hillary Clinton and other luminaries as part of an intelligence-gathering operation. (Researchers say Donald Trump and the Republican National Committee weren’t targeted in this email phishing campaign because if focused on Gmail users, and the RNC doesn’t use Google for its email accounts.)

  • The penetration of the State Department’s unclassified email system in 2014 by Russian hackers. The culprit remained locked in on the government server for months.

  •  China’s targeting last year of the United States’ Office of Personnel Management computer systems, from which it stole information about roughly 23 million current and former federal employees. In so doing, China bypassed a federal government multi-billion-dollar intrusion detection and prevention system.

  •  An attack by Iran in 2013 on the computerized controls of a small dam 25 miles north of New York City, a test of the quality of U.S. infrastructure protection, as well as a series of cyberattacks in 2013 and 2014 on dozens of U.S. banks.

  • North Korea’s cyberattack on South Korea earlier this year, an attempt to hack into the nation’s railway control system and the computer networks of financial institutions. Separately, South Korea also accused North Korea of trying to hack into the smartphones of 300 foreign affairs, security and military officials. Forty phones were compromised.

Encryption Must Be Expanded

To more effectively combat these players and others, encryption is a necessity, not a luxury, and a technology that must be expanded and improved to protect against the sort of attacks cited above and others that target intellectual property. That’s why Mozilla, the creator of the Firefox browser, has always taken encryption seriously, and it’s why Google recently tweaked its search engine to favor web sites that encrypt. Google also changed its email system to offer users the ability to more easily encrypt email. Internet users depend on encryption every day, often without realizing it, to safely shop and bank online, among other things, and we must continue moving in this direction.

In addition, we must fight government agencies and law enforcement officials who propose policies that will harm user security through weakening encryption. They contend that strong encryption helps bad actors. The truth is that it helps everyone who uses the Internet. Their proposals to weaken encryption— especially requirements for backdoors—amounts to a big, exploitable flaw that would erode the security of everybody on the Internet.

The brouhaha earlier this year between the FBI and Apple—an attempt to force Apple to open up an iPhone used in a terrorist attack—has come and gone. But the Justice Department continues to take an aggressive stance toward software companies that use end-to-end encryption. The Justice Department is currently debating how to resolve a similar standoff with WhatsApp, the world’s largest mobile messaging service, in a dispute similar to the FBI-Apple affair.

The Latest Challenge: WhatsApp

In the past year, WhatsApp has been adding encryption to user communications. This has made it nearly impossible for the Justice Department to read WhatsApp messages related to a criminal investigation in which a federal judge approved a wiretap but investigators have been unable to circumvent encryption. Those who say a judge should force WhatsApp to help the government get the information it wants are flat-out wrong.

Fortunately, encryption technology is moving in the right direction overall. WhatsApp, Facebook (which owns WhatsApp), Google, Snapchat and others plan to extend encryption services in the near future.

Encryption is not above vulnerabilities. So financial institutions and others must remain diligent in discovering and fixing encryption implementation weaknesses that present possible attack avenues. They also must get ready for the day when the bad guys make huge strides in their ability to thwart an encryption algorithm. At that point, they will need to take new approaches to encryption. A new encryption paradigm may even be required.

The latter, in particular, would be a daunting task, but if push came to shove would have to be accomplished. At stake would be nothing less than the future of a freely used and ubiquitous Internet.

Robert R. Ackerman Jr. is founder and managing director of Allegis Capital, a Palo Alto, CA-based early stage venture capital firm specializing in cybersecurity.

Read more: The Rise of Nation-State Cyber Attacks Makes Encryption More Crucial Than Ever  | RSA Conference | September 20, 2016

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Introducing WithMoji™ and WithMoji App – The First and Only Animated Emoji

  |   Allegis News, The Latest

By Lindsay Aamodt  |  September 8, 2016  |  IMVU News & Commentary




WithMoji logoIMVU today announced the standalone WithMoji app, the first and only app that gives users personal animated emoji for the new iOS 10 Apple iMessage App Store. IMVU also announced a whole new 3D mobile experience that makes socializing and messaging friends more fun and immersive than ever before.

As the leader in expressive communication and 3D animated emoji, IMVU has skyrocketed to #3 in the top grossing social applications, leveraging their proprietary SSR technology to become an emoji platform .

The free WithMoji app allows users to customize their own avatar, then select from hundreds of emotions to bring their avatar and their conversations to life with animation. The result is the user’s own 3D animated emoji, which is more expressive than typical cartoons and stickers, to share with friends in the new iOS 10 Apple iMessage app.

“IMVU avatars are the vehicle for users to uniquely express themselves to make emotional connections,” says Brett Durrett, CEO of IMVU. “Now, using our WithMoji platform, which couples animated expressions with infinitely customizable avatars, and our 3D mobile experience, we will change the way people communicate universally.”

With over six billion emoji sent worldwide each day in 2015 , and growing 20 percent month-over-month in 2016, emoji as a visual digital language enables the expression of a nuanced range of thoughts and complex feelings. IMVU brings to life that otherwise static sticker or yellow smiley face through the animation of a user’s personalized avatar – their infinitely customized self representation (ranging from a dancing banana to the high fashion self they always dreamed of). The result is an incomparable way for users to convey what words and static emoji cannot.

Also announced today, IMVU is releasing a whole new 3D mobile experience with the following updates:

  •  Group WithMoji – The first and only personal animated emoji coupled with friends to communicate cooperative actions, like cheers, giving a hug, dancing together, and more.
  • WithMoji Shop allows users to buy themed packs of WithMoji like Romance, Celebration, Dance, Attitude, and many more to be released monthly.
  • To continue the immersive chat experience that IMVU users enjoy on the IMVU WebGL platform, IMVU iOS users are now able to keep up with their friends in 3D rooms where they can chat, move about, and have a 360 degree view of their IMVU experience at their fingertips.

IMVU Mobile is available for free on iOS and Android. Additionally, iOS users can now enjoy sending personal animated emoji using the free WithMoji standalone app available in the iOS 10 Apple iMessage App Store. For more information, visit the WithMoji website.

News distributed by IMVU Inc.

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Signifyd racks up $19 mln

  |   Portfolio News, The Latest

By Iris Dorbian  |  September 8, 2016  |  PE Hub Network



San Jose, California-based Signifyd, a provider of fraud protection for ecommerce businesses, has raised $19 million in funding. The investors were Menlo Ventures, TriplePoint Capital and American Express Ventures.
San Jose, Calif. – September 02, 2016 – Signifyd, the fastest-growing provider of fraud protection for e-commerce businesses, today announced it has secured $19 million in capital from Menlo Ventures, TriplePoint Capital and American Express Ventures. This announcement comes on the heels of Signifyd’s $20 million Series B round in February 2016, which included funding from Menlo Ventures, Allegis Capital, IA Ventures, QED Investors, Bill McKiernan and Tim Eades. This latest investment allows Signifyd to scale its infrastructure and further optimize its best-in-class machine learning technology.

E-commerce businesses do not have the time and resources to effectively combat fraud on their own, resulting in lower margins from chargebacks, people costs and declined orders from legitimate customers. Signifyd’s unique 100 percent financial guarantee against fraud allows merchants to see up to 20% increases in margins. Under Signifyd’s guarantee, Signifyd will pay for any fraud costs stemming from a transaction if Signifyd approved the transaction. Merchants of any size can use Signifyd to drive cash flow predictability by completely eliminating fraud losses.

Existing solutions only provide retailers with a cryptic score based on rules, and rely on human expertise to ultimately decide whether or not to accept a transaction. Signifyd has created a new class of risk-assessment technology, using cutting-edge machine learning algorithms that leverages the data of the programmable web. Signifyd simply tells merchants whether or not a purchase is legitimate and if they should ship the product, while guaranteeing every transaction it approves.

“We’re thrilled to partner with Menlo Ventures and American Express,” said Raj Ramanand, CEO and Co-founder of Signifyd. “They are pioneers in financial innovation, enhancing core capabilities and accelerating digital commerce. Our unique approach to delivering a 100% financial guarantee is disrupting digital commerce by driving cash flow predictability to businesses. This was previously not possible and our growth validates the appetite in the market.”

“Merchants of all sizes have a growing need for fraud-management solutions as more consumers shop online,” said Rohit Bodas, Partner, American Express Ventures. “By leveraging machine learning and providing a 100% guarantee, Signifyd is making it possible for even the smallest merchants to combat fraud and achieve measurable cost savings in the process.”

Signifyd was founded by ex-PayPal fraud and risk experts, Raj Ramanand and Mike Liberty. At the end of 2015, the company announced that it had increased to a run rate of $5.6 billion in transaction volume, with an 8x year-over-year revenue growth, and tripled its number of employees. Signifyd now serves over 5,000 e-commerce companies, including several Fortune 1000 retailers such as, Lacoste, and Peet’s Coffee & Tea.

For more information about Signifyd, please visit

About Signifyd

Signifyd was founded on the belief that e-commerce businesses should be able to grow without the fear of fraud. Signifyd solves the challenges that growing e-commerce businesses persistently face: billions of dollars lost in chargebacks, customer dissatisfaction from mistaken declines, and operational costs due to tedious, manual transaction investigation. E-Commerce Assurance, Signifyd’s financial guarantee protecting online retailers in the case of chargebacks, is supported by a full-service machine learning platform that automates fraud prevention allowing businesses to increase sales and open new markets while reducing risk. Signifyd is in use by companies on the Fortune 1000 and Internet Retailer Top 500 list. Signifyd is headquartered in San Jose, CA.

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