TechCrunch this morning covered the launch of a new $ 450 million cybersecurity fund, the second from venture group ForgePoint Capital.
The new vehicle with the inventive name Fund II will mainly focus on early-stage companies in the cybersecurity area. The timing of the fund is not surprising. As we noted in our previous reporting, the recent IPOs of Cloudflare (more here) and CrowdStrike (more here) gave Cybsersecurity a halo, showing founders and investors alike that oversized returns are possible in this area. Such successes cannot harm VCs looking for fresh capital.
To better understand how ForgePoint sees the market, TechCrunch corresponded with the group and asked about fund mechanics (check sizes, investment pace), the cybersecurity sector itself (business models, valuations) and recent liquidity events (especially CrowdStrike). Forge Points Alberto Yépez, Co-founder and managing director of the group, answered our questions.
The following interview was edited slightly for clarity and length. Let's have some fun:
TechCrunch: The new fund is $ 150 million larger than its predecessor. Why increase 50% more for the new vehicle? What is the target number of checks per year? Will it be faster than the previous fund?
ForgePoint Capital: We were one of the first investors to focus on cyber security when topping up our first fund. Since then, the cybersecurity market has grown by more than 50% due to the ever-evolving challenges facing businesses, governments and individuals. We also doubled our investment team. Our team has a unique focus on the market and provides unprecedented expertise and insight into emerging industry trends.
We will continue to invest in six to ten new cybersecurity companies each year and will find great opportunities with leading entrepreneurs.
It is very flexible to use capital for "early-stage and selected growth companies". What is the check size range and what is the target business volume for growth-oriented businesses?
We plan up to $ 25 million for early-stage projects over the life of an investment and up to $ 50 million for growth-oriented companies that are experiencing significant revenue growth.
To what extent has Crowdstrike's successful IPO boosted cyber security-focused startup reviews and fundraising?
A rising tide lifts all boats. In cybersecurity, as elsewhere, the market rewards rapid growth and valuations are reflected [that], We are aimed at companies with great teams that develop innovative solutions that are geared towards high growth. While Crowdstrike's IPO has attracted market attention, over 90% of successful cybersecurity exits are through mergers and acquisitions. Strategic buyers and financial sponsors pay for companies that can scale.