Newly Formed VT Partners Seeks to Combine International Finance, American Adventure, and European Innovation
A recently formed venture capital investment firm aims to feed European technology companies and seed a new entrepreneurial approach to cybersecurity businesses in Europe. Formed earlier this year and now partnered by cybersecurity investment specialist Paladin Capital Group, VT Partners came out of the shadows last week.
VT Partners is a European B2B growth capital firm, founded by ex-Carlyle Group director, Nazo Moosa and former GMT Partners senior partner, Natalie Tydeman. The collaboration with Paladin is designed to provide high potential technology companies — whether they are early stage companies or more established technology SMEs — with a one-stop platform for their funding needs. Moosa becomes Paladin’s new Senior Strategic Partner Europe.
Venture capital in cybersecurity is not without its critics. It has been claimed, for example, that it can promote products beyond their actual worth. While accepting that “venture capital gave birth to many great security companies that would otherwise unavoidably fail,” High-Tech Bridge CEO Ilia Kolochenko believes that the relative stability of the cybersecurity market during a period of great economic instability has attracted investors with little or no knowledge of security.
“Genuine venture capital,” he says, “is not just about cash, but about the tangible help and practical support it can provide to skyrocket the business. Very few VCs really do this — many just create an active semblance of coaching and support that rather hinders the business. Cybersecurity startups should be very careful when they select a VC, and keep in mind that this step is quintessential for their success or failure.”
VT Partners would probably agree with this assessment. It focuses on cybersecurity, artificial intelligence, and critical industries. Paladin is also cybersecurity-centric, with existing successful investments in PhishMe, Digital Shadows, Anomali, Endgame and Panaseer.
“We think that being a generalist in technology is a mug’s game,” Moosa told SecurityWeek. “It’s difficult to invest in the more dynamic sections of technology when you are pursuing a generalist strategy. Cybersecurity is a very good example of that — it’s complex and frequently changing, there’s a lot of vendor churn — and the only way to get smart about the industry is to narrow your focus and spend a lot of time and resources getting to know that industry. Paladin has been doing just that for the last 16 years.”
The reality, however, is that despite similar populations, the U.S. has five-times the venture funding of Europe — and there are reasons for this. “Europe is not short of ideas,” said Moosa. Think of the God Particle, graphene, public key encryption and the world wide web itself. “But the U.S. has more than just capital, it also has a well-established entrepreneurial infrastructure.” This is what is lacking in Europe. “There’s not just a dearth of capital, there’s a dearth of certain skills in Europe.”
Moosa sees the biggest problem for European companies in turning a differentiated product into a market success is a lack of entrepreneurial expertise in product management and marketing. Reflecting Kolochenko’s view of what makes good venture capital, she sees her role as not just providing capital, but in helping clients find the right people to ensure success. “We’ve seen a real excitement around emerging technologies,” she said, “particularly in artificial intelligence, machine learning and data analytics where Europe is leading. But many European businesses do not have access to the appropriate levels of capital and mentorship required to place their business onto a global stage.”
To provide the mentorship, she is turning to the entrepreneurial market pool in the U.S., and especially in Silicon Valley. “I try to bring back certain ex-pats who have successfully moved to the US — sometimes I’m successful, sometimes I’m not. Our collaboration with Paladin in this area is valuable because they have a very strong US cybersecurity market and we tap into that — but ultimately its really about knowing the individuals who are strong in these areas — some are coming out of the companies we invested in ten or 15 years ago — and bringing those into the organizations we invest in. But I do believe that there is a real gap in Europe that needs to be filled if you want to take a product beyond the early stage. The only way to really be able to do that is to work very closely with management teams — management still runs the business, but we try to complement them and fill in the gaps with both temporary and long term solutions.”
The time is ripe for European venture capital. Moosa acknowledges some of the criticism of VC in the U.S. “We are possibly at the peak of the current market — you could argue that markets peak every seven or 8 years; and we’re in year 8 or 9 in the current sequence. Such criticism is often made at this stage, and sometimes legitimately: that there is more money going in, and that there’s more venture capital than intellectual capital in some of the new companies. But I’ve seen two great peaks in 2000 and now in 2007, so criticism might simply reflect where we are in the market right now; but the point that I would bring us back to is that Europe is very, very different.”
If Moosa succeeds, she will bring a combination of international finance and Silicon Valley energy to an underdeveloped but innovative European cybersecurity space. She acknowledges that some of these companies might achieve some success and up-sticks to move to America — if only because many of the early adopters of new technology are American. In her heart, however, she wants to be a part of developing a new and vibrant European cybersecurity industry that will remain very much European.
Related: Fighting Cyber Security FUD and Hype