Look around and it seems every day at least one new cybersecurity company is created. Some grow, some crash and burn but they almost all get access to investment funding. In fact there is so much money sloshing around cybersecurity, it’s hard to see how you can’t get funded.
To understand the criteria used to invest in a start-up, Enterprise Times talked with John Brennan, Partner, YL Ventures. YL Ventures has an interesting target group when it comes to start-ups. It focuses on Israeli companies only. There are more new cybersecurity companies coming out of Israel than the whole of Europe and possibly the US combined.
We asked Brennan why there were so many companies and what made a good investment. He said: “There are a lot of gaps out there. Some are large gaps, some are smaller gaps that a legacy company with a feature could address or a start-up with a smaller solution could fill. When we think about what we are going to invest we consider ourselves very customer driven.”
Those customers that Brennan is talking about are 60 venture advisors who are almost all CISOs. YL Ventures talks to them all the time to see where the gaps are in the market and the problems they face. In fact, Brennan told us that when they get to the point of investing, the founders talk to 10-15 of their advisors to see if this is a big enough problem to justify the venture investment. It’s an interesting feedback loop that allows them to ensure that there really is a market for what they are investing in.
Brennan also talked about the challenge of finding the right start-up and of working with the founders to ensure it can grow and become a business.
To hear more of what Brennan had to say listen to the podcast.
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