Former AVG investors set up $125m fund to tap cyber-sec boom
Equity firm targets growing companies as projected industry growth tops 8%
Former executives and investors from antivirus company AVG have banded together to raise $125m for a fund designed to take advantage of a boom within the global cyber-security industry, Reuters reported.
Following a spate of high-profile attacks worldwide that include those on Saudi Aramco and Sony Pictures, Gartner estimates the cyber-sec market will grow 8% in 2015, to $77bn.
Richard Seewald, an early investor in AVG, said he foresaw similar sustained growth in the industry over the next five years. Seewald's company, Evolution Equity Partners, plans to triple its investment over that period through US and European info-sec firms that are targeting global expansion.
"We are picking segments where top-line growth is exponential," he said. "Large enterprises are not going to stop spending on security software. This spending growth is not going away."
According to Reuters, Evolution has already received contributions of $70m for the fund and is confident its $125m target can be hit by the first quarter of 2016, through steady investment commitments of between $5m and $15m.
Some analysts fear a bubble in the financing of cyber-security services companies. Reuters cited research from CB Insights that claims such deals have totalled $7.3bn since 2010. But Seewald believes he can avoid the projected crash by targeting the right compaies.
"We think there are too many feature-driven cyber security companies that are going to be either folded into a larger acquirer or not move forward at all," he said. "That is exactly where we are not investing."