When J.J. Guy, once a member of the founding team at Carbon Black, the cybersecurity company acquired by VMware for $2.1 billion in 2019, set out to raise funding for his new startup, Sevco Security, one of his first calls was to venture capitalist Jay Leek.
Venture capitalists had largely rejected the then-startup, Guy remembers, for its lack of polish and ability to explain its opportunity in a non-technical meeting. But Leek, then the chief information security officer (CISO) of Blackstone, had gotten it right away, Guy says. He’d written a check.
So when Austin-based Sevco, which offers customers analytics on the security of their information assets across different systems, raised a $15 million Series A funding this June, it was no surprise that Leek’s new VC firm, SYN Ventures, led the round. “I don’t know of any other partner-level VC who has that kind of background,” Guy says.
Launched with cofounder Patrick Heim, the former security chief for Dropbox and Salesforce, SYN Ventures has a new $165 million fund to back more cybersecurity startups like Sevco. The firm has made three investments so far: Sevco, industrial-asset-focused security firm SynSaber, and Transmit Security, in whose mammoth $543 million Series A round the firm participated this month.
News of SYN Ventures’ new fund was first reported in a special Fourth Of July edition of Forbes’ Midas Touch newsletter over the weekend.
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Named after the SYN data packet that starts a TCP handshake connecting a web user’s browser to a website’s servers, SYN Ventures is the second collaboration for Leek and Heim, who previously teamed up at VC firm ClearSky, managing its security fund. That firm continues to invest from its Power & Technology fund today; Leek and Heim are still involved with ClearSky Security to support its portfolio, but SYN and ClearSky have no direct business relationship.
Over their careers as angel investors and the firms, the duo say they’ve backed more than 40 cybersecurity companies, including Carbon Black but also BigID, Cylance, FireEye, HUMAN Security (formerly WhiteOps). With SYN Ventures, they plan to focus on early-stage companies at seed stage and Series A, leveraging their networks of active CISOs to identify promising technology and matchmake potential partnerships.
“It’s a different relationship than [founders] have with other VCs out there, who come as outsiders,” says Heim.
SYN Ventures is taking a different approach that security-minded VC firms that invest in it as part of a defense and civic tech focus or in the case of SineWave Ventures, pitching the promise of bridging software startups to government contacts (and contracts). While many of the entrepreneurs they invest in have and will continue to come out of the U.S. government or Israel Defense Forces, SYN Ventures isn’t focusing on startups that sell, or might sell, their tools back to their former employers.
“The public sector is secondary, because the sales cycle is so long and lumpy,” says Leek. Startups can meet with an agency for months, Heim adds, then find their point-of-contact reassigned and the relationship starting over from scratch. “Revenue coming in from government deals is just really difficult to forecast,” Heim says.
Instead, SYN Ventures is hoping to establish itself as the specialist firm trusted most by corporate CISOs. Former RSA Security chairman and CEO Art Coviello is chairman of the firm’s investment committee; former Optiv CEO Dan Burn and FireEye president John Watters are venture partners.
Such a brain trust, SYN Ventures’ partners believe, will help it identify technology that can catch on in big businesses fast. “We’re not looking to invest in companies that are incrementally better,” Leek says. “We’re looking to invest in companies that are transformational, and disruptive.”