VC funding for European cyber security firms

With the NSA's spying on European citizens well-publicised, London-based C5 Capital is launching what is believed to be Europe's first-ever cyber security venture fund.

NSA surveillance reportedly hits offline PCs
NSA surveillance reportedly hits offline PCs

As detailed in today's Financial Times, C5 Capital is raising a targetted US$ 125 million (£74 million) for a fund to help boost European cyber security companies, and is expected to close the first round of funding shortly. The company aims to reach its final target at some point next year.

The London-based asset manager has already made its first two investments, investing US$ 8 million (£5 million) in Balabit, a Luxembourg-based company which specialises in detecting insider threats. The company does this with its technology which monitors normal and unusual behaviour, using algorithms to discover the latter.

A spokesperson for C5 Capital told SCMagazineUK.com that it is “investing capital investments of US$ 5 million to US$ 25 million (£3 million to £15 million) in fast growing, profitable European companies that operate in the security and data sectors”.

A proviso is that these companies ‘must be established' with minimum base-line revenues of US$10 million (£6 million). “Growth is key so these companies must be growing at least at 20 percent per annum and with barriers to entry such as differentiated technology and IP,” said the spokesperson.

The firm said that it is interested in funding enterprise software providers offering network layer and endpoint security, as well as firms providing defence and detection systems or with technologies that protect key infrastructure.

In addition, the company would also consider investing in those offering regulatory and compliance or data and analytics.

Nazo Moosa, co-founder and managing director at C5 Capital, told FT that being a European company could now be a competitive advantage, as these firms are typically not subject to the same level of data collection carried out by the NSA and GCHQ.

“Saying something was German-made became really relevant in the security sector,” she said. “It is counter-positioning, if you like.”

Moosa added that UK companies are in an “interesting position” with the country's government both a prominent member of the European Union but at the same time closely tied to the US.

In an interview with SCMagazineUK.com, Moosa stressed that this funding is largely a ‘booster' to already established companies demonstrating scale and growth and said that her company is currently interested in looking at those companies providing contextualised security, such as security with big data and security with artificial intelligence.

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