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Politico | “Chinese in D.C. for cyber talks”

  |   Allegis News, The Latest


“The technology is agnostic,” he said in a telephone interview. “It’s how do people use it.” – Robert Ackerman Jr.

Posted from – 12/01/2015


U.S.-CHINA TALKS — U.S. and Chinese officials are scheduled to hold their first meeting on implementing their agreement to refrain from computer hacking for commercial gain. Though the meeting is not a deadline for determining whether China is complying with the accord, U.S. officials hope the talks “on fighting cybercrime and related issues” will help ease tensions.

Homeland Security Secretary Jeh Johnson will lead the U.S. negotiators. China’s Public Security Minister Guo Shengkun will be the senior Chinese representative, according to Chinese state media reports via Reuters.

MEANWHILE IN PARIS — While Johnson and Guo confab in Washington, President Barack Obama and Chinese President Xi Jinping are attending talks on climate change in the French capital. Obama stressed the need for “full adherence” to the pair’s September no-commercial hacking agreement during a summit sidebar, the White House said. Before the meeting, Obama noted that he and Xi “have developed a candid way of discussing” cyber and maritime disputes.

IS THE PLA BEHAVING? — The Chinese People’s Liberation Army, a major perpetrator of commercial hacking, has vastly curtailed its activities since a grand jury in the U.S. indicted five Chinese military officers in 2014, The Washington Post said Monday. Reports of the demise of PLA’s hacking units, however, may be exaggerated. Since the indictments, numerous private-sector reports from firms such as ThreatConnect have been released tying hacking operations to the PLA. And China’s civilian spy agency, the Ministry of State Security, still conducts its own commercial hacking, the Post story notes.

UKRAINE SHOWS RUSSIAN RESTRAINT (SERIOUSLY) — Russia has been accused of many things in Ukraine over the past year, but restraint isn’t among them. Yet, the conflict there has not witnessed the sort of massive cyberattack Russia launched in earlier showdowns with Estonia and Georgia. Why? Ukraine simply lacks “very lucrative targets for destructive cyberattacks and physical attacks,” according to a book out today from NATO’s Cooperative Cyber Defense Center of Excellence in Tallinn, Estonia. Russian espionage and disinformation campaigns trumped cyber priorities and both sides were interested in controlling the conflict’s escalation, writes center director Sven Sakkov. Russia was able to achieve many of its goals through physical rather than virtual means. “If a cable can be cut physically, there is no need to use sophisticated cyberattacks,” the report says. So maybe the Russians don’t deserve much credit for restraint after all. 

AT&T’S STEPHENSON WEIGHS IN ON ENCRYPTION — AT&T CEO Randall Stephenson wrote to employees last week, citing the renewed debate over encryption in the wake of the attacks in Paris in calling on the president and Congress to find a balance between privacy and security. “We are firmly committed to the obligation we have to guard the personal privacy of the people we serve,” Stephenson wrote, according to a copy of the letter obtained by POLITICO. But “all companies must help law enforcement keep Americans safe by complying with valid court orders and legal warrants.” He called for a balance between competing interests but said it is up to policymakers, “not individual companies, to determine that balance.”

CAN’T BE DONE — Count venture capitalist Robert Ackerman among those who doubt anything will come of official Washington’s renewed interest in encrypted communications. The post-Paris calls for such systems to include a “backdoor” for the authorities – which have come from FBI Director James Comey and senior lawmakers in both parties — are doomed, says the founder of Palo Alto-based Allegis Capital. “Can you have a secure backdoor? The answer is emphatically ‘no,’” said Ackerman. “The bad guys are just as smart as the good guys. If there is a vulnerability, they will find it and exploit it.”

Ackerman has a window into the state of technology through his investments in companies such as Area 1 Security and Synack. The veteran investor, who shifted his portfolio about five years ago to a 100 percent focus on cybersecurity and related areas, says the encryption fuss is misplaced. “The technology is agnostic,” he said in a telephone interview. “It’s how do people use it.”

Ackerman also worries that the federal government lacks the needed know-how to work out the encryption puzzle. “This is an area of policy where you really need to understand the technology and the implications of what you’re doing,” he said. “And the expertise around that – there’s not an overabundance of that in the political environs in Washington, D.C.”

RECENTLY ON PRO CYBERSECURITY Sen. Susan Collins and other sponsors of a Cybersecurity Information Sharing Act provision requiring a plan to cope with cyberattacks against critical digital infrastructure are rebutting financial industry critics who call the provision a backdoor to new mandates: The FTC is appealing an administrative judge’s dismissal of its cybersecurity case against LabMD, a lab-testing company: The United States and European Union should agree by Dec. 17 on how to transfer data across the Atlantic, replacing a “safe harbor” pact struck down by a European court last month, a European commissioner said:

GOODLATTE PROMISES HEARING ON LEGAL ACCESS TO DATA ABROAD — House Judiciary Chairman Bob Goodlatte plans to call for a hearing on U.S. requests for data stored abroad at a hearing today on reforming the Electronic Communications Privacy Act. The question of whether ECPA allows U.S. law enforcement to issue warrants for customer emails that U.S. companies are storing abroad is at the center of a legal battle between Microsoft and the Justice Department, which awaits a ruling from the U.S. Court of Appeals for the Second Circuit. In the House, Judiciary Committee members Tom Marino and Suzan DelBene have introduced a bill that would limit the ability of U.S. agencies to access data about non-U.S. persons that’s housed overseas. Similar legislation has been introduced in the Senate.

HOUSE PASSES CYBERCRIME BILL — The House on Monday passed on a voice vote legislation requiring the Secret Service to provide education and training to state and local investigators responsible for investigating cybercrimes. The Strengthening State and Local Cyber Crime Fighting Act also gives the service authority to provide law enforcement, prosecutors and judges with tools to aid such investigations. House Judiciary Chairman Bob Goodlatte praised the passage in a statement and urged the Senate to take up the bill.

COMPUTER FRAUD ACT — Legal scholar Orin Kerr has a new theory about ways to improve application of the Computer Fraud and Abuse Act. The main anti-hacking law is a security researcher’s nightmare, used to prosecute actions that don’t always correspond to the common understanding of computer hacking. A key problem: Although the law criminalizes unauthorized access to a computer, it doesn’t define “authorization.”

Kerr, a law professor at George Washington University and one of the nation’s foremost scholars of the anti-hacking law, suggests applying societal norms from the physical world to cyberspace. Whether a physical trespass occurs in the real world depends on “social understandings about access rights drawn from different signals within the relevant space,” he writes in a new paper. So too in cyberspace.

Kerr writes that if a computer resource such as a website is made publicly available to any user without an obstacle such as a password-controlled logon, the website owner has effectively granted authorization. Terms of service have no bearing on authorization, since “access regulated by written terms is not authenticated access.”

But computer users who repeatedly are prevented from accessing a Wi-Fi network and then create a new account to circumvent the ban risk crossing into unauthorized use. If the ban is meant as a signal to cease a particular behavior, the user could avoid trespass by conforming to the network owner’s expectations through a new account. But “when the ban would be reasonably interpreted as ‘go away and never come back,’ creating another account is unauthorized,” Kerr writes.

Computer luminary Aaron Swartz, for example, crossed into trespass in 2011 by repeatedly logging onto the Massachusetts Institute of Technology’s Wi-Fi network with the intent of continuing the prohibited behavior that got him knocked off, Kerr says. 


Read more:

By: Joseph Marks

With help from David J. Lynch, David Perera and Tim Starks

“Chinese in D.C. for cyber talks.” Politico, 1 Dec 2015. Web. 8 Jan 2016.




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TechCrunch | Microinsurance Is The Answer To The Insurance Industry

  |   Portfolio News, The Latest

Let’s be real. The insurance industry has barely evolved since Benjamin Franklin introduced the concept in the late 1700s.

You’d think after three hundred years and a market size of $1 trillion in the United States alone, insurancecompanies like MetLife and AIG would have nailed it. But they haven’t. Instead, they’ve left millions of Americans paying toward deductibles they’ll never use.

Once known for consistency and stability, insurance companies have quickly found themselves at a crossroads — either stay the course or adapt to change (as seen in the banking, transportation and the food services industries).

Ideally, it’s the latter.

With millennials on track to spend more than $200 billion by the beginning of 2017, bold and scalable moves need to be made if insurance companies want to avoid becoming the next print publisher.

So, how can insurance companies act fast and intelligently? The answer is simple: microinsurance.

Follow The Lead Of Key Investors

Since 2010, investors have funneled more than $2 billion in venture capital into the insurance-tech industry; they are betting on startups’ new approaches to a landscape that has remained virtually stagnant.

Sequoia Capital recently took a step forward in microinsurance — small, rapidly underwritten financial protection against a specific risk over a relatively short period of time. The firm recently invested in Lemonade, a startup focusing on bringing peer-to-peer insurance to the masses.

Felicis Ventures-backed Metromile lets drivers only pay for the coverage they need, rather than commit to a lengthy policy that often goes unused.

Rather than blanketing an entire entity like a car or health with a lengthy, lifetime policy, investors are looking for companies that are trying to focus on events like a car ride or doctor’s appointment to insure instead — e.g.,microinsurance.

Explore New Kinds Of Insurance

Customers and businesses are desperately seeking workable solutions to their problems. Withmicroinsurance, they have the ability to handpick features that offer the right amount of financial protection for the shortest period of time.

Take Opendoor, the startup radically changing the way we buy and sell homes. Not only does the company buy your home over the web instantly and let you close in three days, they also guarantee handling every aspect of the tedious escrow process for you, saving you time, money and headaches.

We’ve also seen companies like Oscar that, in less than five minutes via mobile, connect users with quality and easily accessible healthcare insurance.

Affirm and Klarna offer a new form of consumer financing during checkout, insuring the seller against any defaults in payment.

Adapt To Changing Behavior

Technology innovation has exploded in the last 100 years. In the last two decades alone, millennials have especially grown up in an era of rapid change. They’ve gone from tech ground zero to a thriving tech ecosystem — addressing any and every problem one can imagine.

There also has been a shift in thinking. Millennials want access to cars and houses, but don’t want the responsibility of owning them. In fact, a Goldman Sachs report states that 60 percent of millennials would prefer to rent things like homes and cars rather than own them.

Insurance companies now need to insure the sharing economy, from Airbnb renters to Zipcar users. And anything that is shared needs to be protected. This is where insurance technology comes in. It is the next frontier for companies to tackle.

Put Data And Technology To Use Now

Given that more than 90 percent of the world’s data has been generated in the last two years, theinsurance industry is sitting on an unprecedented amount of data. Accenture found that 78 percent of customers would be willing to share personal information with insurance companies in return for benefits like lower premiums or faster claims settlements.

IoT sensors are helping insurance companies go from watching historical data trends to creating actionable insights that will allow microinsurance policies to be deployed quickly.

Expensive data sets such as car history or public records that used to previously be locked behind corporate firewalls are now available via APIs.

Access to real-time data from IoTs and APIs, combined with advancements in machine learning,will allow fintech startups to tailor protection on an ongoing basis, taking into account unique factors and circumstances, and providing a more personalized microinsurance policy.

Disrupt Existing Regulations

The insurance industry is deeply rooted in regulations. Insurance companies are legally required to maintain statutory reserves, liabilities with respect to their unmatured obligations (i.e., expected future claims). The longer the exposure period, the larger these reserves must be. With microinsurance, the exposure periods are focused on short-term events, reducing exposure and therefore limiting the need for reserves.

Other industries have recently seen similar disruption. Companies like Airbnb and Uber have sidestepped onerous municipal rules that govern short-term lodging and taxicab services by describing themselves as communications platforms for people who want to rent out their spare bedrooms or the passenger seats in their cars.

Leveraging microinsurance, fintech startups will take the lead not just in rethinking this antiquated insurance system, but also creating completely new kinds of insurance that will meet the dynamic needs of millennials. And perhaps the leading voice for insurance companies won’t be a gecko or a pig anymore, but a unicorn.

Do you think microinsurance is the future for fintech companies? I look forward to hearing your comments in the section below.


Find more at TechCrunch:

“Microinsurance is the Answer to the Insurance Industry.” TechCrunch, 29 Dec 2015. Web. 7 Jan 2016.



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Business Wire | Signifyd Announces Bill McKiernan, Founder of CyberSource, to it’s Board

  |   Portfolio News, The Latest
McKiernan led CyberSource Corporation to its $2 billion acquisition by Visa



Signifyd, the fastest-growing provider of fraud protection services for e-commerce businesses, today announced that Bill McKiernan, founder of Visa subsidiary CyberSource Corporation, will be assuming a role on Signifyd’s Board. McKiernan’s expertise in the payments and fraud management space as well as his experience with building and growing startups will be invaluable as Signifyd continues to accelerate growth and expand its team.


billmckiernan “We’re thrilled to have Bill on our Board, as his knowledge of e-commerce and fraud will benefit our business as a whole,” said Rajesh Ramanand, CEO and co-founder of Signifyd. “Bill’s strategic thinking is exactly in line with how we want to approach the new year and his insights will help take Signifyd to the next level through updates to our services, new partnerships and more.”

In 1994, Bill McKiernan founded CyberSource Corporation and served as its CEO until 2010, when the company was acquired by Visa for $2 billion. The acquisition is one of the largest in Visa’s history, and at the time CyberSource was handling over $120 billion per year in payments volume representing approximately 25 percent of online transactions in the United States. Following the acquisition, McKiernan served as an Executive Advisor for Visa until 2012. He currently serves as the President of WSM Capital LLC.


“I’ve been involved with various companies throughout my 30 plus years in the industry, and I’m particularly excited to start contributing to Signifyd this year,” said Bill McKiernan. “They are revolutionizing fraud management with their financial guarantee and providing peace of mind to online merchants. This is an important advancement to a massive market. Signifyd is doing something in the industry that is rare and incredibly beneficial for e-commerce businesses, essentially ending the era of chargebacks, and I am looking forward to collaborating with the company.”


Signifyd’s multi-faceted approach to fraud prevention surpasses the results an internal fraud team could achieve by blocking fraudulent transactions so fraud is virtually invisible to the merchant. By guaranteeing payments to merchants in the event of fraud for all approved transactions, Signifyd levels the playing field between online and brick-and-mortar retail businesses through fraud protection combining domain expertise with machine learning.
About Signifyd

Headquartered in San Jose, CA, Signifyd was founded by Raj Ramanand and Mike Liberty, a team of veteran risk and fraud experts from PayPal, to help online businesses prevent payment fraud. Signifyd’s full-service cloud platform simplifies fraud detection through a financial guarantee, allowing businesses to increase sales while reducing fraud losses. Signifyd is in use by multiple companies on the Fortune 1000 and Internet Retailer Top 500 list. The Company is backed by top tier Venture Capital firms such as Allegis Capital, Andreessen Horowitz, Data Collective, IA Ventures, Lucas Ventures, QED Investors, Resolute VC and Tekton Ventures.


For more information on Signifyd, please visit



VSC for Signifyd
Kayla Abbassi


  • Headquarters: San Jose, CA
  • CEO: Rajesh Ramanand
  • Employees: 50
  • Organization: PRI


Find more at BusinessWire:

“Signifyd Announces Addition of Bill McKiernan, Founder of CyberSource Corporation, to its Board.”  7 Jan. 2016. Web.

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xconomy | The Myth of a Secure Back Door for Encryption

  |   The Latest


“In the domain of cyber security and encryption, the bad guys are just as smart as the good guys.  […]  If there is a back-door, they will find and exploit it.” 


It seems like an appealing move – give the FBI and other law enforcement agencies, as well as our spy organizations, a back door – a “golden key” – to unveil (unlock, maybe?) YES encrypted communications to help catch criminals and terrorists and to protect Americans from harm. This notion of heightened protection is particularly compelling in the wake of the recent terrorist attacks in Paris and suspected Islamic State complicity in the mass killings in San Bernardino, Calif., the worst homeland terrorist episode since 9/11.


When 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 recently 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 the unvarnished truth is that the golden key is a fictitious panacea. It is analogous to iron pyrite, not gold.


In the domain of cyber security and encryption, the bad guys are just as smart as the good guys.  Their trade craft is focused on identifying and exploiting vulnerabilities.  If there is a back-door, they will find and exploit it.  End of Story – Full Stop.   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.  Exhibit A – the OPM breach.   As for industry as a guardian: Exhibit B – the RSA breach.  In short, all vulnerabilities will be found and exploited by the protagonists in the on-going cyber security battle. (We’ll spell out the victims of the breaches, so please confirm: OPM = Office of Personnel Management.  RSA = RSA Security, the cybersecurity company hacked in 2011) YES


And lest we forget, 99.9999% (percent?) of the users of encryption technology do so for legitimate reasons; to protect sensitive information that in the wrong hands can and will cause irreparable damage and harm.  Our Government charges corporations, institutions and individuals to take personal responsibility for their cyber security.  In many cases, failure to do so on the part of corporations can result in heavy penalties and litigation.  Encryption is not a panacea in this regard but it can be a particularly effective tool for keeping private that which would otherwise be misappropriated and misused.


If encryption is one of the most effective tools we have to protect our most sensitive information, talk of the creation of a Golden Key will undermine essential innovation and undermine venture capital investment in encryption solutions, an invaluable element of our cyber security tool box. Companies like Crowdstrike, known for outing Chinese and Russian hackers; Vera, which locks down transferred documents; and Keybase, which aims to make encryption easier to use, all rely (rely?) upon market demand for their solutions. Venture capitalists will think twice about investing in these and similar startups if demand for a back door to encrypted systems undermines the effectiveness of, and demand for, encryption.  Further, given that encryption innovation is not the exclusive domain of U.S. innovators, we can expect that technologists operating outside of the U.S. will be more than happy to fill a void created by a U.S. retreat from encryption innovation.


Only two months ago, it looked like efforts to demand a back door or produce a Golden Key would be derailed because the Obama administration backed down in a dispute with Silicon Valley over the encryption of data on iPhones and other digital devices. The administration reached the conclusion that it wasn’t possible to give American law enforcement and intelligence agencies access to that information without also creating an opening that state actors, cyber criminals and terrorists could exploit.


Unfortunately, the White House and congressional staffers have subsequently asked Silicon Valley executives to re-open talks on the matter in the wake of the Paris terrorist attacks. This is at least partly a public relations dance; Washington doesn’t want to create the impression that it’s brushing off the implications of a tragedy. There is no evidence that Islamic State attackers in Paris relied on scrambled communications. But the U.S. Senate Intelligence Committee has theorized that the terrorists likely used “end-to-end” encryption because no direct communications among terrorists was detected. And, too, Islamic State has created tutorials on how to evade electronic surveillance on the cheap.


Admittedly, debating the pros and cons of a back door to encrypted systems may seem academic. If a there is no such thing as a “secure” back door or Golden Key, what is the point?


Nonetheless, it is worth noting that two larger issues are at play here, and they favor the “no back door” viewpoint. One is the Fourth Amendment of (to?)YES the Constitution, which states that “the right of the people to be secure in their persons, houses, papers and effects, against unreasonable searches and seizures, shall not be violated”. Isn’t that the point of encryption?


The second issue is whether a Golden Key would, in fact, help the FBI and other law enforcement agencies be more effective. The FBI’s Comey, for example, has focused on the fatal shooting of a man in Illinois in June and suggested that police would have been able to track down the shooter but for encryption built into both of the victim’s two phones. He failed to mention that one of the phones – a Samsung Galaxy S6 – isn’t encrypted by default.


A related point is the oft-cited fact that the Manhattan district attorney’s office encountered locked iPhones on 74 occasions over a nine-month period. Bear in mind that the DA’s office handles about 100,000 cases in the course of a year, and then do the math. You’ll see that officials encountered encryption in less than 0.1 percent of cases. Also, the DA has never explained how even one of these 74 encrypted iPhones blocked a successful prosecution.


The Golden Key issue has put Silicon Valley at ground zero in a tug of war. Apple, Microsoft, Google and other technology companies have been encrypting more of their corporate and customer data after learning the National Security Agency and its counterparts were siphoning off digital communications and hacking into corporate data centers. Law enforcement and intelligence agency leaders counter that such efforts thwart their ability to monitor terrorists and criminals, but Silicon Valley is standing firm.


I’m hardly the only technology industry observer who argues that development of a Golden Key is fruitless. A few months ago, The New York Times reported that the Massachusetts Institute of Technology published a paper by leading technologists arguing that it is technically impractical and would expose consumers and businesses to a greater risk of data breaches. “(An encryption Golden Key) is unworkable in practice, raises enormous legal and ethical questions, and would undo progress on security at a time when Internet vulnerabilities are causing extreme economic harm,” wrote the report’s 15 authors, who included Whitfield Diffie, one of the inventors of modern encryption.


Globally, companies are now spending more than $76 billion annually to protect themselves, and often their customers, from cyber (attacks?)YES. We need to deploy the most effective techniques and technologies available to protect our sensitive information and the foundations of our digital economy – including encryption.


Our law enforcement and intelligence communities are tasked with a vitally important and very difficult job, no doubt made more difficult by advances in technology.  This has been the case for decades and will continue to be the challenge going forward.  That said, lowering the standards of protection for data and communications cannot, and will not, be the answer.  Rather, here too we need to focus on new innovative approaches to identifying the bad actors that represent a threat to our society.      Innovation is the answer.  Compromising our defenses is not.



Robert R. Ackerman, Jr. is the Founder and Managing Director of Allegis Capital a seed and early-stage venture firm focused on investments in cybersecurity startups. Previously, he was a successful technology entrepreneur.


“The Myth of a Secure Back Door for Encryption.” xconomy, 7 Jan 2016. Web.


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TechCrunch | Cockroaches Versus Unicorns: The Golden Age Of Cybersecurity Startups

  |   The Latest
Bob Ackerman, founder of Allegis Capital, has been investing in cybersecurity for more than 15 years […] there has never been a better time for cybersecurity entrepreneurs. And while the fundamentals have not changed, the exit dynamics may be changing.


cockroachAccording to Gartner, worldwide information security spending reached $76.9 billion in 2015. As the frequency and intensity of hacks worsen,
security spending is expected to reach $170 billion by 2020. That’s more than 100 percent growth in five years.
Venture capital (VC) investments in cybersecurity startups continues to grow steadily (~40 percent each year over the past 5 years); 2015 may reach an all-time high, with projections of ~ $3.5 billion.





“Cockroaches Versus Unicorns: The Golden Age of Cybersecurity Startups.” TechCrunch, 6 January 2016. Web.


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TechCrunch | Happy New Year – Unless You’re a Startup

  |   The Latest
Editor’s noteBob Ackerman is managing director and founder of Allegis Capital and a leading expert in cybersecurity and data analytics. He sits on the boards of Apprion, DriverSide, Purewave and Shape Security.


As we enter a new year, innovation is advancing across a broad front — mobile, data analytics, virtualization, security, the sharing economy, payment systems and more. That’s the good news.


Here’s the not-so-good news. As in the period leading up to the dot-com bust in the late ’90s, enthusiasm for technology startups is running ahead of their reasonable prospects. We are, as Alan Greenspan said in 1996, in a time of irrational exuberance. The rapidly increasing valuations placed on a wide variety of private companies show that future expectations have once again come untethered from present performance.


champagneYour broker may tell you that prior performance is not indicative of future results but historians know different. The past does indeed repeat itself and the specter of the collapse of the year 2000 is in the air. Or, as Yogi Berra said, it’s déjà vu all over again. The correction will probably not be as significant as 2000 given the qualitative differences in many of today’s startups, but gravity is immutable and omnipresent – and the startup community is on a path to re-learning some of the past lessons.




TechCrunch post on 



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WSJ | Palantir and Investors Spar Over How to Cash In

  |   The Latest

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

  |   The Latest

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


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

  |   The Latest

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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