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.

OUR TEAM

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.

OUR COMPETITIVE ADVANTAGE

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.

Many O3V portfolio companies have core technologies that were developed within U.S. Government/Intelligence Agencies, which are considered to be national security assets and have since been spun-out into private companies.

OUR EXPERTISE

O3V’s expertise further enhances venture capital’s superior risk-adjusted returns.

Secures extremely attractive valuations, relative to often inflated Silicon Valley valuation premiums.

Outstanding risk management through O3V’s thematic approach to investment, starting with validation of technology from code to systems architecture.

Portfolio companies have growing revenues, proven products, large addressable markets, referenceable tier-one customers and significant competitive advantage.

Lead investor in the round, securing strong governance rights and flexibility in taking minority or majority positions.

OUR RISK MITIGATION METHODOLOGY

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.

CYBERSECURITY INDUSTRY DATA

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.

PROJECTED MARKET GROWTH

The global cybersecurity market was $85.3 billion in 2016; $187.1 billion by 2021 (unrelated to GDP, a CAGR of 17%).

PROJECTED GROWTH OF ANNUAL CYBERCRIME COSTS

Annual cybercrime costs, globally, are expected to grow from $3 trillion in 2015 to $6 trillion in 2021 (a CAGR of 12.2%).

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.

NOTABLE EXITS

Trusteer (22.5x – revenue multiple)

FireEye (20.5x)

Palo Alto Networks (13.4x)

Splunk (13.0x)

SourceFire (8.9x)

OUR O3CI PORTFOLIO

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.

Provides automated cybersecurity threat remediation by aggregating and applying threat intelligence at a speed and scale unmatched today (providing real-time defense against known bad actors on the Internet).

Pioneered the application of artificial intelligence/ machine learning analytics to satellite/ drone imagery/ sensory data and big data to extract actionable, predictive business intelligence that was previously unobtainable.

Provides a highly proprietary approach to software defined security that will accelerate the $1 trillion communications sector’s transfer from hardware to software, providing enterprises with network security at a scale well beyond the competition.

O3V PARTNERS INVESTMENT

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.

ADVISORY BOARD

Our world class Advisory Board consists of CIO’s from organizations such as DoD, U.S. Cyber Command, CIA, Merrill Lynch, BP, Philip Morris and a CEO of one of the top M&A exits in 2011, NetWitness.

Former Special Command Advisor, US Cyber Command, and Deputy Assistant Secretary of Defense (Deputy DoD CIO)

Former U.S. Assistant Secretary of Defense and Current Advisory Board member of NSA

Former Chief Information Officer of CIA

Former Chief Information Officer of Merrill Lynch, Altria, AOL Time Warner

MANAGEMENT TEAM

The Option3Ventures team combines expertise gained both on Wall Street and in Washington that allows us to optimally invest, grow and exit from the most attractive opportunities. Our background encompasses directly relevant experience gained in the U.S. military & intelligence communities, defense industrial base, public & private equity investing and investment banking.

Managing Partner

Chief Financial Officer

Managing Director

Chief Technology Officer

Executive-In-Residence — Sales & Marketing

INVESTMENT COMMITTEE

Our Investment Committee consists of tier-one financial industry leaders whose professional roles have included managing and negotiating investment capital deployment, allocation, structuring, governance and strategies, presiding over billions of dollars in investment capital and achieving successful outcomes.

Former Vice President of World Bank

President of Andlinger & Company

Former World Bank Principal Financial Analyst

Legal Advisor

Contact Us

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