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Funding Tips For Cybersec Startups

If you're a cybersecurity company, the region’s godfather of angel investing, John May, says finding an angel should be easier than finding customers. (Something is terribly wrong if you can’t find either.) Angel investors don’t have to write checks like VCs do but when they do, they’re in for the long haul. At MACH37’s “Funding the Startup” panel in Arlington, Va., Wednesday, True Venture’s John Burke also said make sure your founder is not alone. Companies with two to three founders are more desirable to VCs.

No Blu Venture Investors’ Scott Berg wasn’t ordering another beer from the non-existent waiter here. He was saying the government is the best source of non-dilutive capital. When startups get federal R&D grants, it validates the technology and answers a problem that a particular agency is facing. But Hudson Fairfax Group’s Tom Frommack warns that the agency need for that technology may come before the commercial sector’s need for that technology. Another challenge for startups doing government work is whether they’re going to be able to adjust to the commercial grind.

Amplifier Ventures and Tandem NSI’s Jonathan Aberman says we’re seeing the start of a major shift in federal agencies like DARPA and NSA interacting more with entrepreneurs. He also predicted that the DC region will be as significant in cybersecurity 10 years from now as Silicon Valley is with... well technology in general. Grotech’s Scott Frederick says there’s already a base of promising startups in the region. Some tips for raising capital: Make sure your startup’s valuation is accurate; your product timing is right for the market; and be coachable. Investors don’t invest in toddlers who refuse to give up their pacifiers.

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