Talking NEVYs (and Cybersecurity) With Ascent Venture Partners Senior Associate Baiyin Zhou
On May 9, the New England Venture Capital Association (NEVCA) is holding their annual award show, the NEVY Awards at the House of Blues in Boston. As part of the lead-up to this year's Star Wars-themed event, we're going to be posting a number of bite-sized Q&As between now and the 9th—each offering a bit more insight into what attendees can expect (here's the first one we did with MassRobotics Co-Founder Joyce Sidopoulos).
For this installment, we spoke with Ascent Venture Partners Senior Associate Baiyin Zhou about the event, as well as trends in the cybersecurity industry. This year, "Cybersecurity Company of the Year" nominees include Veracode, Recorded Future, Threat Stack, Edgewise Networks, Black Duck, and GreatHorn Inc.
Alex Culafi (AC): Boston is definitely a leader in the world of cybersecurity. Why do you think this region has built such a strong base of companies tackling these problems?
Baiyin Zhou (BZ): Boston has become a leader in cybersecurity due to the presence of customers, access to security talent, and geographic proximity to strong Israeli cyber technologists and practitioners. The best and biggest enterprise customers in financial services and healthcare, who are often early adopters are headquartered in Boston. Secondly, a constant talent pool and new research is constantly being developed in Boston via our strong universities and large, long-standing security companies such as RSA and Akamai. Lastly, Israel has produced talented cybersecurity developers via their military program. Many of these developers go on to create their own companies and move to Boston to access the North American market and build their US presence. The west coast is simply too far from Israel and Europe but Boston and east coast are in the perfect time zone. In fact, since 2016 at least 10 new Israeli-founded cyber companies have established a presence in Massachusetts, joining the likes of CyberArk, Cybereason, Akamai and RSA.
AC: What are some of the trends in the cybersecurity industry that you are seeing?
BZ: Dollars spent by companies for cybersecurity solutions, driven largely by cybercrime, has increased 35x over thirteen years according to The Cybersecurity Market Report and doesn't show signs of slowing down given a widening attack surface. According to Pitchbook data, an increasing number of new vendors enter the market annually (from 77 in 2012 to over 320 in 2017), making it difficult for CISOs to differentiate between solutions. Lastly, there is a major talent shortage with 3.5 million unfilled cybersecurity jobs projected in 2021, up from 1 million in 2017. As a result, we have companies needing to do more with fewer resources in a confusing and crowded cybersecurity products market.
AC: When you are evaluating a company in the cybersecurity industry for a potential investment, what are the key elements that you are looking for?
BZ: At the early stage, we are looking for a strong value proposition served by a differentiated technology and led by a management team that has the vision, passion and experience to bring the product to market and scale the company.
AC: Outside of the NEVY nominees, what other companies in the Boston cybersecurity industry do you find interesting?
BZ: We recently invested in next generation SIEM empow, which is led by former CEO of Fidelis Security Systems Peter George and founded by Israeli entrepreneur Avi Chesla. Empow uses AI and machine learning analytics to classify threats and alerts based on intent, prioritizes them, and uses the existing security infrastructure to respond. We are thrilled to partner with empow because not only did it fit our thesis around the SIEM/SOAR category, but it provides a transformative solution to customers and is led by a trusted, previous Ascent-backed CEO Peter George.
AC: The NEVYs are right around the corner! What are you looking forward to the most that night?
BZ: The NEVYs is an exciting evening that allows everyone in the entrepreneurial Boston community to pause and celebrate all the accomplishments in our community from the past year. I can't wait to drink and laugh with entrepreneurs, investors and service providers I've come to know in my time in Boston, many of whom I consider close friends. And it doesn't hurt that this year's NEVYs is Star Wars themed!
AC: What is one thing that excited the Academy about each NEVYs nominee in the Cybersecurity category?
BZ: As a representative of the Academy this year focused on Cybersecurity, I am proud to say that all of us have watched the nominees create, develop, pivot, and grow up over the years. The truth is building a company is a long and arduous grind that can sometimes feel lonely and which can take you on a roller coaster ride. The one thing that excited us about this year's nominee group is no matter where they are on their journey, they have brought innovation and jobs to the Boston ecosystem and persisted in their mission to help companies fight cybercrime and protect valuable data.