Investing in Defense Tech: Insights from RSA

Aaron Applbaum, Former Director of Investments

It has become increasingly apparent, and confirmed at this most recent RSA conference, that true cybersecurity innovation rarely springs in a vacuum, and almost never does so alone.

For every company claiming to have a solution for a serious problem, there are handfuls of others that claim to do the same and better. While attempting to maintain their "uniqueness" cybersecurity companies continually claim to have the best shot at winning the largest slice of a pre-defined addressable market. This leads to noise and redundancy.

A common refrain from attendees of the RSA conference was that the exposition floor was not where any real business was done, for drowning out the noise (and lights) to control for the true innovators has become too difficult. Imitation is the highest form of flattery, although the marketing tropes of cybersecurity companies seem to be more a necessity than traditional theatrics.

The clustering that takes place might be a matter of survival. While cybersecurity is a growing industry there is a finite addressable market (Gartner estimates 81.6BN USD in 2016). Budgets are increasing, business cases have been made for high security spend, yet there is no unlimited well of capital in which these cybersecurity companies can draw current and potential income. Every company makes claim over as much of the total addressable market as they can to justify its existence. This leads many companies to slowly start to resemble one another in an attempt to solve as many familiar problems as possible.

The prediction espoused in response to this phenomenon is that cybersecurity's near-future holds serious consolidation. Not all companies in all categories will survive — they will be acquired, join forces, or disappear.

Strategic Cyber Ventures is differentiated from other venture funds in that it is predicated on a thesis of cybersecurity interoperability, a portfolio of companies that complement each other leading to a whole ecosystem of security. The success of one company becomes the success of the others as the whole operation builds in an upward spiral of success. The unintendedly cannibalistic tendencies of other security providers are left by the wayside.

The most recent investment Strategic Cyber Ventures has made stands as a prime example of an additive member of the SCV ecosystem that does not gain in value from laying claim to pre-defined TAM (total addressable market) categories.

The newest investment is making leaps in what self-delineated space of memory augmentation. Polarity is unique in that it does not only help solve the scarcity of cybersecurity talent, not only is it a force multiplier for security operations infrastructures, but it does so in a way that negates our traditional conceptions of TAM. It is rare, a truly differentiated technology that comes around and cannot be placed in a neatly defined category, which cannot be understood in relation to a similar company.

Polarity creates a method for reverse look-up allowing the contents of a computer screen to be searched in large databases automatically highlighting threats an analyst might not have thought to look for. Polarity also allows users to attach information to a string of characters (like an IP address, or a name) such that the next time that string of characters shows up, a heads-up display pops up to inform the user of what else is known about that entity.

Polarity does not have a constrained TAM in the same way as other cybersecurity controls do, and so there is an outsized opportunity to proliferate and ultimately make money. It can be used for customer relationship management, sales, security operations center operations, traditional intelligence analysis, library research, or any other topic where there is more knowledge available than one user can know on their own.

Cybersecurity threats are dynamic, and what will protect us successfully tomorrow is unclear. The solutions will, however, certainly come about through collaboration, interoperability, and the occasional spark of unique genius.