Former AVG investors build cyber security fund to chase growth

Mon Sep 21, 2015 7:05pm EDT
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By Jason Hovet

PRAGUE (Reuters) - A group of former executives and investors from antivirus software maker AVG Technologies AVG.N is raising a $125 million fund to tap into opportunities in the booming cyber security sector, a founding partner in the fund said.

With the size and scope of cyber attacks on companies growing in recent years, the security industry has seen a steady rise in financing deals and a market that research firm Gartner estimates will grow by 8 percent in 2015 to $77 billion.

Technology investor Richard Seewald, one of the original investors in AVG, said the market for cyber security spending would continue to grow at that pace over the next five years.

He said his company Evolution Equity Partners will seek to triple its investment over that time by tapping U.S. and European companies ready to expand globally.

"We are picking segments where top line growth is exponential," he said. "Large enterprises are not going to stop spending on security software. This spending growth is not going away."

Evolution has secured $70 million in commitments for its new cyber security fund and expects to reach a goal of $125 million by the first quarter of 2016. Investments will likely range from $5 million to $15 million, Seewald said.

The fund will target up to 15 companies, with an eye on their sale or an initial public offering in a three- to five-year period, he added.

The fund's first two investments are SecurityScorecard and Onapsis, which closed a $17 million funding round last week. Boston-based Onapsis, which specializes in securing SAP and Oracle enterprise applications, posted 2014 revenue growth of 130 percent.   Continued...

A man types on a computer keyboard in Warsaw in this February 28, 2013 illustration file picture. REUTERS/Kacper Pempel/Files