J.J. Guy was once part of the founding team of Carbon Black, a cybersecurity company that VMware acquired in 2019 for $2.1 billion. He set out to raise capital for his startup, Sevco Security. Jay Leek was one of his first contacts.
Guy recalls that venture capitalists had generally rejected the startup because of its lacklustre presentation and inability to explain its potential in a non-technical setting. Guy claims that Leek, the then chief information security officer (CISO), of Blackstone had gotten it immediately. He had written a check.
Sevco, an Austin-based company that offers analytics on the security of information assets across multiple systems to customers, raised $15 million in Series A funding. It was no surprise that Leek’s new VC firm SYN Ventures led the round. Guy states that he doesn’t know any other partner-level VC with such a background.
SYN Ventures was founded by Patrick Heim, former security chief at Dropbox and Salesforce. The fund, which is $165 million, will support more cybersecurity startups such as Sevco. So far, the firm has made three investments: Sevco and SynSaber security, which is a security company that focuses on industrial assets, as well as Transmit Security, in whose massive $543 million Series B round this month, the firm participated.
Named after the SYN packet that initiates a TCP handshake between a web user’s browser and a website’s server, SYN Ventures was established in 2012. Heim and Leek previously worked together at ClearSky, which managed its security fund. ClearSky Security continues to invest through its Power & Technology fund. Leek and Heim remain involved with ClearSky Security to help its portfolio. However, SYN and ClearSky do not have a direct business relationship.
The duo claims that they have backed over 40 cybersecurity companies in their careers as angel investors. They plan to work with SYN Ventures to target early-stage companies in Series A and seed stage. They will also leverage their active CISOs and leverage their networks to find promising technology and matchmake possible partnerships.
Heim says, “It’s a very different relationship than the one [founders] have to other VCs out there, who come as outsiders.”
SYN Ventures is a departure from security-minded VC companies that invest in it as part of a defence and civic technology focus, or SineWave Ventures in pitching the promise to bridge software startups with government contacts (and contracts). SYN Ventures doesn’t focus on startups that might sell their tools to former employers, even though many of their investors have come from the U.S. government and Israel Defense Forces.
Leek says that the public sector is secondary because of the long sales cycle. Heim says startups can meet with agencies for several months and then have their point of contact reassigned, thereby starting over. Heim states that it is difficult to predict the revenue coming in from government contracts.
SYN Ventures hopes to be the specialist firm most trusted by corporate CISOs. Art Coviello, the former CEO of RSA Security, is the firm’s investment committee chairman. John Watters, former CEO at FireEye and Dan Burn are also ventured, partners.
SYN Ventures partners believe such a brain trust will quickly identify the technology that is most applicable in large businesses. Leek states that they are not interested in investing in companies that are incrementally more successful. We want to invest in companies that can be transformative and disruptive.