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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.

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

Find Article here: events.stanford.edu

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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 tcell.io

SOURCE tCell

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

E8-Logo-Color

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: marketwired.com 
 

PRESS CONTACT
Doug De Orchis
Voce Communications for E8 Security P: (617) 897-8259
E: ddeorchis@vocecomm.com

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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…

 

Article found here: Macobserver.com/podcasts 

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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.

Article found here http://blog.imvu.com/

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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 Jet.com, Lacoste, and Peet’s Coffee & Tea.

For more information about Signifyd, please visit www.signifyd.com.

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.

News distributed by PE Hub Network

Article found here https://www.pehub.com

 

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WSJ | Investors Turn Cautious Toward Cybersecurity

  |   Allegis News, The Latest

Venture capitalists wait longer to make deals but remain optimistic as enterprises keep adding to security budgets

 

By Cat Zakrzewski  |  Aug. 1, 2016
Logo_TheWSJ
Investors say they’re waiting longer to make investments in cybersecurity startups but remain optimistic about the sector as enterprises continue to increase their security budgets.

 

Venture investment in cybersecurity rose modestly in the first half of 2016, according to data from Dow Jones VentureSource. Investors bet $1.39 billion on the sector, vs. $1.03 billion in the same period last year.

“We’ve been more cautious,” said Asheem Chandna, a partner at Greylock Partners. He added that this was true across all sectors.

Many predict the current investment climate will be a prominent topic of conversation as the cybersecurity industry descends on Las Vegas this week for the annual Black Hat conference.

The rise in fresh capital was modest and follows several years of larger year-over-year growth. In 2015, the sector saw a boom in investment in the third quarter, driven by mega-rounds of financing for later-stage companies. Some investors said they don’t expect that kind of activity to hold up the rest of this year, but added that it won’t be a sharp slowdown either. Most enterprises continue to increase their security budgets, they said, even as other information-technology allocations are lowered.

“In 2015, there was a level of irrational exuberance on the part of the investment community as it related to cybersecurity companies,” said Allegis Capital Managing Director Robert Ackerman. “Now we’re seeing some moderation, which is a very healthy and constructive thing.”

Experienced security investors say the segment saw so much interest in recent years that companies without legs were funded. Now they say the hype around the sector is cooling off.

“The tourists are going to pack up and leave,” said Ten Eleven Ventures Founder Alex Doll. “I think a lot of the larger funds that weren’t good in security had started to try to play in this space.”

Several large, later-stage deals led the way in attracting new capital, including a $100 million investment in Cylance Inc., and a $76 million round in ForeScout Technologies Inc. Both companies reached billion-dollar valuations with these rounds.

But overall, venture capitalists say they’re seeing valuations in the segment readjust, much as they have done broadly across the tech sector. The decline in valuations has led to a steady amount of mergers and acquisitions in cybersecurity, which investors seems likely to pick up as a more diverse group of buyers have been assessing the industry for potential deals.

In recent months, Symantec Corp. said it would acquire Blue Coat Systems Inc. for $4.65 billion. Cisco Systems Inc. bought security firm CloudLock Inc. for $293 million.

Some venture capitalists said they expect private-equity firms will continue to play a role in security acquisitions. Vista Equity Partners announced in June it would acquire Ping Identity Corp. Legacy tech firms will also likely be active acquirers, investors said, because they rely on such acquisitions for innovation and see security as a growing area of their business.

Trident Capital Cybersecurity Managing Director Alberto Yepez said the influx of mergers and acquisitions is also driven by an influx of nontraditional acquirers, like General Electric Co. and industrial companies, as more devices become connected and security becomes more core to their business. He also said telecommunications service providers have become more active in the segment.

“The universe of acquirers has expanded,” he said.

In recent years, much of the activity in security investment has been driven by emerging technologies. Some investors think many of those changes haven’t been addressed yet and will continue to draw investment.

“I think we’re just beginning to see the mobile tsunami in security,” Mr. Yepez said.

 

 

Find more @

http://www.wsj.com/articles/investors-turn-cautious-toward-cybersecurity-1470051006?mod=wsjde_finanzen_wsj_barron_tickers

 

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Xconomy | Allegis Capital Leader Co-Founds DataTribe To Tap Government Research

  |   Entrepreneur Resources, Portfolio News, The Latest
By: Bernadette Tansey   –  July 28th, 2016
 @Tansey_Xconomy     @xconomy     @AllegisCapital     @Data_Tribe

In 2015, Silicon Valley venture firm founder Robert Ackerman was helping the founders of Maryland startup Onyara to prepare for a fundraising round that would allow them to mine the commercial potential of advanced data processing technology developed at the National Security Agency.

“I just found my next billion-dollar idea,” Ackerman says he was thinking at the time.

But then, Santa Clara, CA-based data management software company Hortonworks  (NASDAQ: HDP) swept in and offered to buy Onyara for “north of $40 million,” Ackerman recalls. And his venture firm, Allegis Capital, missed the chance to lead the Series A fundraising round for a company that might have yielded a much bigger payoff for both founders and investors, Ackerman says.

He realized that founders like Onyara’s—new entrepreneurs coming out of East Coast government intelligence labs—needed more support than a venture firm usually provides. Rather than tackle all the steps ahead for Onyara as a startup, its founders accepted the instant Hortonworks payout, he says.

“If we could have filled that void, we could have taken that company much further,” Ackerman says.

It was one of the pivotal experiences that led Ackerman to co-found a new “startup studio” called DataTribe, whose formation was announced publicly this week.

cybersecurity-locks

DataTribe aims to find promising technologies developed from government research; form companies to license the technologies; and enlist former government engineers as executives or tech experts.

Such engineers are plentiful in the Washington, DC, Beltway area, where they work on cutting-edge government-funded projects in cybersecurity, big data, and data analytics for defense agencies. But they often lack the entrepreneurial experience to get a startup launched and funded, Ackerman says. And they’re far from Silicon Valley’s ecosystem of incubators, venture firms, experienced product rollout managers, and universities that foster entrepreneurship.

Ackerman co-founded DataTribe with former CIA information technology officer Steve Witt, who was Onyara’s CEO, and Mike Janke, a former Navy SEAL who was CEO of Silent Circle, a secure communications service he founded. DataTribe has attracted financial backing from consulting and audit firm Deloitte; Yahoo Japan, a site that combines search, news and e-commerce features; and other unnamed financial investors. Deloitte and Yahoo Japan are the kinds of strategic partners that could become customers or distribution channels for the products created by DataTribe’s startups, Ackerman says. (Verizon, which announced this week it will buy the core business of Sunnyvale, CA-based Yahoo, will not acquire Yahoo’s stake in Yahoo Japan. That stake will be held by an investment company created from Yahoo’s remaining assets.)

DataTribe isn’t alone as it sets up as a feeder system to funnel ideas and experts from government intelligence agencies into the private market.

At Tel Aviv, Israel-based Team8, three co-founders who are former security experts with the Israeli Defense Forces’ Technology & Intelligence Unit 8200 (described as Israel’s NSA) are tapping their networks to form cybersecurity startups. Team8 invested $5 million in Tel Aviv-based startup Illusive Networks, which closed a $25 million Series B fundraising round in May, backed by investors including Eric Schmidt’s Innovation Endeavors, New Enterprise Associates (NEA), Bessemer Venture Partners, and Cisco Investments.

A new cybersecurity startup incubator, Build Sec Foundry, sprung up last month in San Antonio, Texas, to help ex-military members become new cybersecurity entrepreneurs. San Antonio is home to the Texas branch of the NSA; the FBI’s Cyber Division; and dozens of defense contractors and security companies.

Ackerman says DataTribe won’t confine its reach to U.S. government technology and domestic founding teams, but will look at opportunities in the United Kingdom and other nations.

Ackerman declined to say how much money DataTribe has raised, but says it will have an “appreciable operating budget.”

In February, DataTribe quietly moved into its headquarters in Fulton, MD, near the National Security Agency’s headquarters at Fort Meade, MD, and the I-95 corridor that leads south toward Washington. Its co-headquarters is at Palo Alto, CA-based Allegis Capital, which is a strategic partner of DataTribe’s and a likely investor in the startups it creates. The idea is to connect the technology being generated by government agencies with Silicon Valley expertise and access to capital, Ackerman says.

DataTribe is already working toward the close of its first startup investment: the Maryland company, Dragos, was founded by former NSA intelligence officers to provide cybersecurity for industrial control systems.

Rather than a fund, DataTribe is an “operating company” that will build startups, recruit their executives, and support them with as much as $1.5 million in seed funding, Ackerman says. The plan is to create two to three startups a year, keep them in-house for nine months to a year, and get them ready for a Series A fundraising round. DataTribe would retain significant equity stakes in the companies—a percent that would vary with each startup.

Witt leads an operating team that will consist of about seven or eight full-time members working in either Maryland or California, Ackerman says. DataTribe will also tap into a “brain trust” of executives, drawn from Allegis’s network, who will screen and mentor the startups and serve as directors, he says. Some may be financial investors in the startups.

With DataTribe, Ackerman is trying to capture the same potential financial payoff he once envisioned for Onyara, which was translating technology created for government purposes such as national defense into commercial products suitable for businesses.

Onyara was founded to commercialize data-flow technology called “Niagara Files” or NiFi, which was created at the NSA and released as an open source resource by the agency. What Hortonworks saw in Onyara’s technology was a way to enhance its service to clients, who use its Apache Hadoop software framework to process large amounts of data reliably. Hortonworks said its acquisition of Onyara would help it smooth out the collection of data from clickstreams, server logs, social media feeds, connected devices such as sensors, and other sources, as well as verify and secure these inputs headed for data analysis.

Ackerman sees government agencies such as the NSA as wellsprings of commercially valuable ideas, because they must invent solutions when the needs of government agencies go beyond the capacity of products available from private industry. This is particularly true for defense agencies engaged in collecting and analyzing massive amounts of information to protect the country against cyberattacks and other threats.

“Because of the scale at which they work, they’re seeing limitations before anybody else,’’ Ackerman says. Allegis has invested heavily in cybersecurity since 2000, and NSA veterans are involved in several of its portfolio companies.

“They’re operating five years ahead of everybody else,” Ackerman says. “Ideally, you want somebody who’s seen the future.”

By contrast, private companies don’t tend to invest in research to solve problems five years ahead in the future, he says.

With the input of co-founder Janke, the former Navy SEAL, DataTribe is modeling its competitive strategy on the methods of the elite Navy unit, Ackerman says. Like the SEALs, disruptive young companies can also find ways to succeed even though they deploy “small teams versus larger, better-resourced adversaries,” he says.

“That sounds a lot like a startup,” Ackerman says. “The odds are tipped against you.”

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http://www.xconomy.com/san-francisco/2016/07/28/allegis-capital-leader-co-founds-datatribe-to-tap-government-research/?single_page=true

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WSJ | DataTribe Launches To Back Entrepreneurs Leaving Government Roles

  |   Entrepreneur Resources, Portfolio News, The Latest
By: Cat Zakrzewski | July 26, 2016

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DataTribe Co-founder Mike Janke, Onyara Co-founder Joe Witt and Synack Co-Founder Jay Kaplan speak at a gathering in Maryland. DataTribe helps scientists and engineers leaving government jobs build startups.  Photo: Yonald Chery 

A venture capitalist, a SEAL Team Six veteran and a CIA alumnus are skipping Silicon Valley’s garages and heading to government labs to groom a new wave of entrepreneurs.

Their studio DataTribe launches in Fulton, Md.. on Tuesday to help engineers working in government agencies, labs or the intelligence community to launch their own cybersecurity and big data companies.

Mike Janke, co-founder of DataTribe , served on the elite SEAL Team Six before serving as Silent Circle chief executive. He said the government spends billions of dollars on research-and-development projects that are ahead of commercial business. However many of the scientists coming out of government don’t have business backgrounds and face a steep learning curve when try out entrepreneurship.

“They’re like, ‘What is a term sheet?’ ” Mr. Janke said. “We actually bring them in and we teach them. Before we even give them a term sheet, we make sure they have an independent counsel, and they go through a class on what term sheets are.”

Backed by Deloitte, Yahoo Japan Corp., Allegis Capital and other strategic investors, DataTribe will provide up to $1.5 million in financing to each startup that participates in its 9-to-12-month program. Though DataTribe participants may have developed engineering chops in government, the program will aim to teach them the ins and outs of running a commercial business.

Mr. Janke, Allegis Capital Managing Director Robert Ackerman andSteve Witt, a former CIA officer and entrepreneur, said they recognized a need to build an “ecosystem” for startups in the Washington area. Some Silicon Valley accelerators take a “spray and pray” approach to building companies, investing small checks in hundreds every year. But Mr. Janke said to build a lasting startup ecosystem on the East Coast, DataTribe borrowed from his military training and instead took a “sniper” approach to pick and choose its targets. The studio will only invest in three to four startups a year and provide them with more resources and funding than a traditional incubator.

DataTribe will provide these entrepreneurs with office space and access to its in-house product management, product development, marketing and sales staff until they’re ready for traditional venture financing.

Although Mr. Janke said there is an excess of technical talent in the Washington area, entrepreneurs inside the Beltway have noted a lack of experienced enterprise sales professionals or marketing professionals. Mr. Janke thinks DataTribe can help companies fill that gap. By pairing them with DataTribe’s experienced marketing and sales professionals early, they can train other employees to help the companies run like traditional Silicon Valley startups.

“You can’t expect to draw all those tiers from [Silicon Valley],” Mr. Janke said. “So what we do is we actually build that ecosystem.”

Mr. Janke said DataTribe won’t limit itself to engineers leaving the U.S. government. They’re also seeking entrepreneurs from similar backgrounds in other nations.

The studio launches as venture funding has flowed to cybersecurity startups in recent years, and with it, former government employees. Several startups that have raised significant funding rounds are led by former intelligence community professionals. Keith Alexander, a former chief of the National Security Agency, launched IronNet. Other companies led by entrepreneurs with military or government ties include Tenable Network Security Inc., Area 1 Security Inc., Endgame Inc., Synack Inc., and Qadium Inc.

Such links have been forged even as tensions have mounted between Washington and technology companies. Much of that stems from confrontations over governmental access to digital communications, but another source of friction is the competition for talent. On a recent trip to California, Homeland Security Secretary Jeh Johnsonsaid that is the government’s chief point of contention with Silicon Valley as people change jobs more frequently and technology companies offer much more competitive salaries.

But Mr. Janke says the DataTribe founders have drawn positive responses to the program from colleagues in government. He said government agencies have encouraged engineers to test their ideas with DataTribe before leaving their current jobs.

“They actually have asked to send entrepreneurs in residence to be in our office now,” Mr. Janke said.

In forming DataTribe, the founders have taken notes from Team8 Labs Ltd., a foundry that builds cybersecurity companies with talent from Israel Defense Forces’ Unit 8200, that country’s equivalent of the National Security Agency. One of its companies, Illusive Networks Ltd., has raised $30 million in funding.

The DataTribe team—which receives no government funding—has already tested their approach with Onyara Inc., which Hortonworks Inc. acquired in 2015. Mr. Witt served as chief executive of the company, which commercialized NSA-developed technology.

Now DataTribe is beginning to work with others. One is Dragos Security, an industrial control center cybersecurity company started by former NSA officers. Dragos CEO Robert Lee said it was important to him to find investors that also shared a government background and were mission-oriented.

“There’s a lot of talent on the East Coast that’s not getting a lot of attention,” Mr. Lee said. “[DataTribe] was a perfect fit.

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http://www.wsj.com/articles/datatribe-launches-to-back-entrepreneurs-leaving-government-roles-1469532619

 

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