Cybersecurity
Former McAfee CEO ups the cybersecurity ante with $750M venture fund
July 26, 2021
As companies and investors scramble to keep up with a changing information security landscape, a new venture firm is vying to become a leader in the industry's brave new world.
NightDragon has closed its inaugural growth fund at $750 million, massive by the standards of first-time funds and the largest dedicated cybersecurity VC fund to date, according to PitchBook data.
The reasons for the surge of investment in digital threat protection are a well-known pandemic story. The rise of remote work sent companies of all stripes to the cloud and amplified the number of access points to critical information.
"The walls have come down on our network," said Dave DeWalt, NightDragon managing director and founder. "A lot of security companies have been caught flat-footed."
As the former CEO of cybersecurity companies FireEye and McAfee, DeWalt is betting that NightDragon can bring the expertise that growth-stage companies need to capture market share.
Cybersecurity startups are on track for a blowout year, and the table stakes for investors are going up. The average US VC deal size for a late-stage startup in the sector has more than doubled since last year, to $92 million.
Meanwhile, bad actors have proliferated and become ever more audacious in their attacks, snarling everything from pipelines to meat plants with ransomware attacks. And public offerings from companies like Palantir and CrowdStrike have shown that investors stand ready to reward disruptive venture-backed businesses.
NightDragon stands out from the crowd for its audacious debut fund—but it's not alone. Security specialist ForgePoint Capital closed a $450 million cybersecurity fund last year. More generalist investors Insight Partners and Accel have been the most active late-stage cybersecurity investors in recent years, according to PitchBook data.
NightDragon is targeting companies with $20 million to $50 million in revenue and aims to write checks between $30 million and $60 million in size. The firm's portfolio includes satellite data and analytics startup HawkEye 360 and cloud security company iBoss.
In addition to the fund, NightDragon has raised a $300 million SPAC, dubbed NightDragon Acquisition. It also has an advisory business that will help portfolio companies scale marketing efforts, improve talent development and land strategic partnerships.
As the realm of information security has evolved, DeWalt believes that late-stage investors will need to become more specialized. Cybersecurity expertise, for example, can help companies navigate how to serve big-spending government clients. DeWalt was a national security adviser to the Obama administration, and managing director Ken Gonzalez is a former US Army officer and was a managing director at ForgePoint.
"The days of being a generalist are over," DeWalt said.
Featured image by Colin Anderson Productions pty ltd/Getty Images
NightDragon has closed its inaugural growth fund at $750 million, massive by the standards of first-time funds and the largest dedicated cybersecurity VC fund to date, according to PitchBook data.
The reasons for the surge of investment in digital threat protection are a well-known pandemic story. The rise of remote work sent companies of all stripes to the cloud and amplified the number of access points to critical information.
"The walls have come down on our network," said Dave DeWalt, NightDragon managing director and founder. "A lot of security companies have been caught flat-footed."
As the former CEO of cybersecurity companies FireEye and McAfee, DeWalt is betting that NightDragon can bring the expertise that growth-stage companies need to capture market share.
Cybersecurity startups are on track for a blowout year, and the table stakes for investors are going up. The average US VC deal size for a late-stage startup in the sector has more than doubled since last year, to $92 million.
Meanwhile, bad actors have proliferated and become ever more audacious in their attacks, snarling everything from pipelines to meat plants with ransomware attacks. And public offerings from companies like Palantir and CrowdStrike have shown that investors stand ready to reward disruptive venture-backed businesses.
NightDragon stands out from the crowd for its audacious debut fund—but it's not alone. Security specialist ForgePoint Capital closed a $450 million cybersecurity fund last year. More generalist investors Insight Partners and Accel have been the most active late-stage cybersecurity investors in recent years, according to PitchBook data.
NightDragon is targeting companies with $20 million to $50 million in revenue and aims to write checks between $30 million and $60 million in size. The firm's portfolio includes satellite data and analytics startup HawkEye 360 and cloud security company iBoss.
In addition to the fund, NightDragon has raised a $300 million SPAC, dubbed NightDragon Acquisition. It also has an advisory business that will help portfolio companies scale marketing efforts, improve talent development and land strategic partnerships.
As the realm of information security has evolved, DeWalt believes that late-stage investors will need to become more specialized. Cybersecurity expertise, for example, can help companies navigate how to serve big-spending government clients. DeWalt was a national security adviser to the Obama administration, and managing director Ken Gonzalez is a former US Army officer and was a managing director at ForgePoint.
"The days of being a generalist are over," DeWalt said.
Featured image by Colin Anderson Productions pty ltd/Getty Images
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