Money, money, money...

Venture capital in the Silicon Valley is akin to a heart in the human body. If it fails to contract effectively, and thus normal circulation of the blood/money is deterred, you experience cardiac arrest.

I’m writing this in a Starbucks in San Mateo, California. On the fifteen-minute drive from Palo Alto, I passed more IT companies and ‘technology kingdoms’ – Oracle, I’m talking about you – than I could begin to list. It’s a cliché, I know, but Silicon Valley really is the epicenter of the information security industry – where the workers go in search of the most desirable companies (and salaries), and the vendors compete to get the best people, the best innovation, and funding.

I’ve just had lunch with Alberto Yepez, who has, to date, invested more than $200 million in information security firms. He hands me a list of all of the security investments that Trident Capital, the venture capitalist firm where he serves as managing director, has made. Among them are Qualys, Solera Networks, and Alien Vault, to name a few.

Perhaps unsurprisingly, Yepez tells me that now is the perfect time to be investing in information security. Why? “Because the threat is real, sophisticated, well funded or state-sponsored.” But that’s not the only reason, he told me smiling. “Compliance is driving behavior in security, making it a board room topic.” While this might be bad news for government departments and private companies being targeted, it can mean only prosperity for information security vendors (and thus venture capitalists) able to demonstrate security while enabling the business.

In the middle of the Silicon Valley, with hundreds, thousands, of tech companies looking for venture capital, how does Yepez identify which are going to bring him return on investment, and which are hot air? Trident, he tells me, are thesis-driven investors. They look for four attributes: marketing; IP; go-to-market strategy; and team. “We look for companies that solve big problems. The ones that will grow to replace the Symantecs and the McAfees”, he summarizes.

And look they do. Obviously, start-ups and existing companies alike approach Trident Capital in hope of a slice of that venture pie, but equally, Yepez and his colleagues are eagerly scouring the market for promising investments. In fact, right now they are on the hunt for big data and security companies in relation to mobile infrastructure and platforms.

Contrary to what one may read or believe, venture capital isn’t all about the money – at least it isn’t for Yepez. “Success is relative”, he tells me, with complete sincerity. “Sure, money is one aspect – venture capitalists get measured on money. But it’s about more than that.”

Yepez, passionate about the industry to which he drip-feeds investment, is a hands-on venture capitalist, insisting on a board seat at any company he invests in. Alien Vault, who I also visited on this trip, is no exception. “The expertise and knowledge that investors [including Alberto] bring is indisputable. It’s hard not to respect what they bring to the table”, said Russell Spitler, VP of product management at AlienVault.

Ashar Aziz, founder and CEO of FireEye, who I also had the pleasure of interviewing during my time in the Silicon Valley, received venture capital funding (although not from Trident) and agrees that strategic input from investors is “invaluable”. Aziz, too, insists that money is not the be all and end all, and says that “money is just the beginning”. Investors are looking for more than return dollars when they agree to fund, and recipients of that funding are looking for more than cash – they’re looking for priceless advice and guidance.

So here’s the thing…As you drive around the indulgently affluent Silicon Valley, and take in the huge expanse of buildings, often ‘campuses’, displaying the most well-recognized logos in IT and information security, you could be forgiven for assuming that Silicon Valley is all about money. But you’d be mistaken.

The core of the industry, the very heart of it, relies on passion, intelligence, ambition, and perhaps, most importantly, the desire to make a difference. What I came to realize is that money is not the heart. Sure, it’s important – in fact, it’s one of the vital organs that are required to keep the body/industry functioning, alive even. But as a stand alone, it can achieve nothing. The passion, the talent, and the inclination to make the world a safer place – well that’s the heart of Silicon Valley. That’s what keeps the blood pumping.
 

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