Option3Ventures Lives At The Cybersecurity Investing Frontier
Cybersecurity investing isn’t part of what we do. It’s everything we do. We draw on expertise and experience gained in the U.S. intelligence community and the investment industry to identify the true investment whitespaces – the underserved and underinvested frontiers where traditional information security solutions won’t work.
Option3Ventures (O3V) is a venture capital management firm that invests in, manages and provides growth support to the highest quality companies in the information security, management and analytics sectors.
O3V’s management team combines specialized experience from the U.S. Government/Intelligence Community, commercial IT industry and investment banking.
At the core of O3V is its world-class Advisory Board, consisting of former Chief Information Officers (“CIOs”) ranging from organizations such as: U.S. Department of Defense, U.S. Cyber Command and the CIA (U.S. Government), to Cisco, BP, Altria/ Philip Morris, AOL-Time Warner and Merrill Lynch (Commercial).
Deep U.S. Government Heritage: The U.S. Department of Defense, U.S. Cyber Command, CIA, NSA, etc.
Strong Commercial Expertise: Cisco, BP, Altria/ Phillip Morris, AOL-Time Warner, GM, Merrill Lynch, TRW, NetWitness
Management Team: Pedigreed backgrounds ranging from bulge-bracket investment banking and Fortune 100 technology companies to U.S. Government Agencies. Many members have top security clearances.
Proprietary access to best-of-breed technology companies derived from the D.C. Cyber Corridor, one of the most prominent cybersecurity innovation centers in the world today.
O3V’s expertise further enhances venture capital’s superior risk-adjusted returns.
Option3Ventures employs a proprietary risk mitigation strategy that seeks to identify and minimize downside potential across all facets of any company it invests in.
Technology risk is mitigated primarily by demonstrating proven products that have been accepted and deployed by blue chip customers (typically commercial and federal). Furthermore, each company must meet Option3Ventures’ own internally developed technology evaluation matrix.
Market risk is mitigated through a thorough evaluation of the sub-sector that the company serves, typically done with the guidance of Option3Ventures’ Advisory Board. We look both at current market growth rates as well as assesment of future threats and competing technologies.
Competition risk is mitigated by a demonstration by the company of winning open RFPs against leading competitors. This is ascertained by detailed customer diligence by Option3Ventures’ sales & marketing experts. In many cases, the companies that O3V looks at have little current competition in which case an assessment is made of likely market entrants.
O3V mitigates Execution Risk by investing in proven management teams and providing significant operational support, in order to accelerate each portfolio company’s growth.
As lead investor, Option3Ventures typically seeks to obtain the most attractive governance terms, typically with respect to annual budgetary approval and other key governance terms.
Option3Ventures will not pay outsized valuations sometimes seen in the cybersecurity sector, particularly in companies coming out of Silicon Valley. Given many companies are early in their revenue ramp, we evaluate companies on the basis of prior rounds, comparable transactions, and to a lesser extent invested capital.
In the past five years, this sector has attracted $7.3B in investment capital, creating over 1,000 companies with more than 350 exits.
Increasing theft and compromise of government and commercial information, including: customer, employee, intellectual property and operating information, has created urgent demand within the government and commercial sectors for solutions. In response, robust govt. and corporate spending has accelerated technological innovation and company creation.
As a result, there has been significant allocation of venture capital dollars into cybersecurity, spurred by public and private sector demand for solutions to these threats.
There are many market entrants in cybersecurity and it has become increasingly important to invest through industry experts (with operational expertise), such as Option3Ventures, that have thoroughly vetted companies to understand core technologies, while able to accurately gauge addressable market demand, competition and competitive advantage.
The O3Ci portfolio consists of three companies with breakthrough technologies. Investors in O3Ci gain access to a unique investment opportunity consisting of a portfolio of rigorously vetted, proprietary high-growth companies. The O3Ci portfolio is comprised of companies with uncorrelated technologies in different market verticals providing investors with reduced concentration risk through diversification.
Several Option3Ventures partners have placed a one-off limited partner investment in a market leading data classification company that some of the team had been involved with prior to joining O3V.
Watchful Software provides user-friendly, data-centric classification and keystroke dynamics that don’t impact your users. RightsWATCH and TypeWATCH are tailored to provide persistent security solutions that prevent accidental and malicious disclosure. As a result, your security protocols are enhanced and compliance becomes the rule.