I recently read the New York Times article, “The Pentagon as Silicon Valley’s Incubator,” by Somini Sengupta, which highlights a welcomed trend in cyber security investing that most of us in the industry are watching unfold. The article highlights the enhanced relationship between Silicon Valley venture capital firms and DoD and Intelligence Community cyber security stakeholders. The article also underscores my assertion that the DC-Maryland-Virginia Cyber Beltway is the center of mass for global cyber security expertise (see Blog Post: dated August 2013, “The Cyber Beltway’s Innovation Dislocation").We at MACH37 are thrilled that Silicon Valley and other venture capital rich regions are bridging the gap with the Cyber Beltway. We continue to strongly support initiatives focused on achieving such gains, such as the Security Innovation Network, which has made tremendous strides in bringing both communities together.However, Sengupta’s article illuminates a related and troubling trend – the migration of cyber entrepreneurs from the Cyber Beltway to Silicon Valley.Specifically, Sengupta references two cyber security start-ups, Morta and Synack, both of whom recently pulled up chocks and moved to Silicon Valley to secure venture investment. Sengupta also references several other high profile cyber security policy stakeholders who migrated West to join other cyber security startups.I can imagine why VC’s would desire to keep first time entrepreneurs close to home. It’s difficult for VC’s to effectively mentor and manage young and inexperienced entrepreneurs when they are separated by over 2,850 miles. I can also imagine why former policy stakeholders would be drawn to the luster of the fast-paced Silicon Valley start-up environment. I am sure that echoes of Horace Greeley’s “Go West Young Man” add to the excitement and romance of their first entrepreneurial experience.However, if VC’s have already recognized the unmatched density of cyber security expertise residing within the Cyber Beltway, it makes little sense to me that they would desire for these entrepreneurs to leave the rich intellectual ecosystem that originally inspired them.In the cyber security space, perhaps more than any other technology sector, intellectual capital has a very short shelf-life. In order for cyber security companies to thrive beyond the releases of their initial alphas and betas, their founders and technologists must continue to innovate. In order to do so, they must maintain an awareness of the state of the cyber threat as well as the state of their competitive environments.By pulling these entrepreneurs out of the cyber intellectual epicenter, their VC’s are inadvertently undermining their ability to compete over the long term. Outside the Cyber Beltway, these entrepreneurs are going to lose a step and will find it more difficult to, not only keep up with the threat, but also to seize and defend a competitive market position.To be certain, in Silicon Valley, these entrepreneurs are going to find a wealth of expertise in new venture development, software engineering, and enterprise solution sales and marketing. But they will also find a dearth of cyber security expertise. There are lots of folks out West who know how to build a highly scalable database to search through and correlate log and threat data, but very few of them have any idea what they are actually looking for.Let me suggest an alternative approach. Stay East Young Man (and Woman).If VC’s want to give their cyber security entrepreneurs every advantage to succeed, leave them inside the Cyber Beltway. If the entrepreneur is a first timer, establish your firm’s presence here and surround the entrepreneur with experienced talent. By allowing the entrepreneur to remain immersed in the ecosystem that originally inspired her, her venture will continue to innovate, keeping pace with the cyber threat and competitive environment. Several venture firms with strong cyber security track records such as NEA, Grotech, New Atlantic, Valhalla, Harbert, Columbia Capital, Paladin and Alsop Louie understand the importance of this immersion and are either already established or are in the process of building a more sustained presence within the Cyber Beltway.MACH37 is working hard to make it easier for both cyber entrepreneurs and venture capitalists to build cyber security companies inside the Cyber Beltway. We augment our entrepreneurs’ existing cyber security skill sets with the critical product management, development, sales and marketing and venture development capabilities they will need to succeed. We pair them with seasoned entrepreneurs, cyber technologists, market analysts and venture advisors who are committed to helping them be successful. We drive their ventures through concept validation, target market customer acceptance, and alpha commitment and provide them and their investors with the strong market-driven foundations they will need to achieve the success we are all driving towards.
The Mach37 family was busy last Thursday. We announced our Fall 2016 Cohort and a new Mach37 platinum sponsor, SAP National Security Services. On the same day, spring 2016 cohort alumnus Hill Top Security won the Virginia Velocity Tour Northern Virginia Region pitch competition and the $25,000 top prize. Hill Top CEO and Founder Tom Gilmore accepted the award at the Fall Cohort Introduction dinner Thursday evening in front of a crowd of more than 250 Mach37 supporters. We recently interviewed Tom on our Mach37 blog and it is clear that the company is already making an impact.
The Virginia Velocity Tour is overseen by the Virginia Secretary of Commerce and Trade and planned in partnership with our friends at Village Capital. We appreciate that Virginia Governor Terry McAuliffe, Secretary of Commerce and Trade Todd Haymore and Village Capital’s Ross Baird are so supportive of the start-up community across the state. Twenty-nine finalists competed for top honors in five regions.At Mach37, we work with entrepreneurs from all over the world. Two of the five companies in our current cohort are from Europe and we also have entrepreneurs joining us from Nevada and North Carolina. We maintain a global outlook regarding cybersecurity, but we also appreciate introducing these companies to the business-friendly climate in Virginia. The Virginia Velocity Tour is another example of the start-up support that founders receive from the state and can access as part of the Mach37 family. Congratulations again to Tom and the entire Hill Top team.
