January 23, 2014 | by Katie Benner
When it comes to building cyber defenses, the government and entrepreneurs are fast becoming bedfellows. A decade ago, the two camps barely interacted. Today, they are working together closely. As attackers get more sophisticated, the public and private sectors need intelligence from each other. They also need similar tools, such as mobile security software and high-tech maps.
Veteran investors with deep ties to Washington officials sometimes have an edge in getting in on hot technology investment deals. But the convergence between the public and private sectors is also creating openings for cybersecurity non-traditionalists like Peter Thiel. A PayPal co-founder known for his early investment in Facebook, he helped build Palantir Technologies, a high-profile data analytics software company recently valued by investors at around $9 billion.
In part two of our look into cybersecurity investing, The Information examined investors with Beltway bona fides, the folks government officials seeking new technologies call first. We also identified individuals with long track records but who aren't part of big firms. Lastly, we picked a trio of up-and-comers who are making big investments and generating a lot of buzz.
Co-founder and managing partner, Enlightenment Capital
Kimmich Software Systems and NetCentric Technology, which make cyber analytics software
Aspen Security Forum advisory board and board observer to Vistronix and Opera Solutions
Mr. Talbott is a true D.C. insider. He worked at TCG Financial Partners, which was founded by ex-Defense Secretary William Cohen, and he built out the defense and government practice for investment firm D.E. Shaw. In 2012 he co-founded Enlightenment Capital to invest in exclusively in companies that sell to federal agencies. The board includes former leaders from the Department of Defense.
Through his portfolio company Vistronix, he's rolling up smaller cyber-focused government contractors in the hopes of building out a formidable services company. He recently invested in Opera Solutions alongside Accel-KKR and Silver Lake Sumeru.
Unlike many VCs, he's willing to do both equity and debt deals because he believes debt is a good way for companies to get money without giving away equity.
Looking ahead: Between recent revelations about NSA surveillance programs and calls for fiscal austerity, Mr. Talbott has concerns that the government will pull back on investing in cybersecurity as the threats are growing and changing.