From 1717 Pennsylvania Ave NW, Tom Kellermann can nearly see the green grass on the White House's north lawn.
Founded in the heart of D.C., Kellermann leads a newly establish venture capital firm by the name of Strategic Cyber Ventures (SCV). The group focuses on investing in a special breed of cybersecurity companies. And they chose D.C. as home because of the region's wealth of cybersecurity talent.
"The greatest expenditure of cybersecurity products and services are concentrated between Manhattan and Washington DC ... The human capital needed to solve the cybersecurity challenges of 2020 are here," Kellermann, a said in an email interview with DC Inno.
Kellerman, Trend Micro's former CSO, once sat on the Commission on Cyber Security for President Barrack Obama and was an advisor to the International Cyber Security Protection Alliance (ICSPA). In addition, he sometimes teaches as an adjunct professor at local institution American University.
In 2016, SCV plans to make 8 to 10 investments, each ranging from $5 to $10 million, in "synergistic cybersecurity companies which can tackle the cyber threats of tomorrow."
Central to the firm's identity, Kellerman believes that the vast majority of money flowing into cyber, today, is aimed at companies that "follow trends in the market" rather than attack patterns—defined by a surplus of cyber breaches reported.
SCV consists of a 4-person team that includes Kellermann, COO Hank Thomas, CTO Ann Barron-DiCamillo and Director of Research and Investments Aaron Applbaum.
"we acknowledge that the cybersecurity valuation bubble is bursting"
Thomas was a longtime executive at Booz Allen Hamilton for the global consulting firm's cybersecurity division. Prior to joining SCV, Barron-DiCamillo was the Director of the United States Computer Emergency Readiness Team (US-CERT). While with US-CERT, she helped spearhead a number of programs for the Department of Homeland Security. Applbaum previously served as Direct Investor for Hudson Bay Capital Management, a NYC-based asset management firm.
On Tuesday, SCV made their first investment in the form of a $5 million bet on San Mateo, Calif.-based TrapX. As a participating investor, they joined return backers Intel Capital and Liberty Israel Venture Fund. TrapX's software helps organizations detect, capture, and analyze zero day malware, which is used by some of the world’s most effective Advanced Persistent Threat (APT) actors. An automated security grid built by TrapX allows for "adaptive deception and defense that intercept real-time threats while providing the actionable intelligence to block attackers," the firm's LinkedIn profile reads.
Kellermann explained that he was inspired to create SCV because: "many cutting edge security technologies are being overlooked by [most] investors [today]."
Hudson Bay Capital originally offered to provide Kellermann with the initial capital for his new firm, setting in place the chips so that he could join forces with industry luminaries like Barron-Dicamillo and Thomas.
"As an investment fund we provide top tier financial growth opportunities for early to mid stage cybersecurity companies through transformative strategic advisory and investment," said Kellermann. "We provide numerous services at no cost to our members from Technology Roadmap refinement; to partnership development; to business development; to public relations all the way through talent recruitment. We are not trying to flip companies."
He added, "we acknowledge that the cybersecurity valuation bubble is bursting and as VC money begins to dry up there is a pressing need for smart money with longterm vision."
