1Mby1M Virtual Accelerator Investor Forum: With Mark Achler of MATH Venture Partners (Part 2)

Sramana Mitra: Can you also double-click down into cyber security? Cyber security has urgency. As a result, it is also one of the most crowded markets of venture capital. It has always been that way. I’ve been in this industry for more than 20 years. There has always been huge amounts of cyber security investments and huge amounts of cyber security startups. How do you parse cyber security?

Mark Achler: I’ll give you an example of the two portfolio companies that we have. One is called NowSecure. They are the experts in mobile. If you look at utilization, more utilization and transactions are done through mobile than on the web. But if you look at resources, the vast majority of resources and infrastructure around cyber security are on the web. If you ask the CSO of a large company to show their head count,

you will find that the budget is spent on a web-based team. The activity, however, is on mobile. We think there’s a real disconnect between where the threat is and where the resources are being spent. NowSecure is one of the leaders in the industry around mobile security. We really like that a lot as a niche.

RedSeal, another one of our portfolio companies, is doing exceptionally well. They, as opposed to trying to block bad things from happening, provide a very detailed map and analysis of every single device in a large network and how and where those devices are connected. Many large organizations truly have a map of each and every one of their devices and the interconnectivity between those devices. That’s what RedSeal does.

Sramana Mitra: We have covered RedSeal, so I know this company. Let’s switch gears and double-click down a bit on understanding your stage preference. Let me preface that by saying that when I was younger and raising money for my companies, we used to be in a simple world where we had seed and we had Series A. Now we’re not in that simple world anymore.

The ecosystem has become very segmented. You have friends and family. You have pre-seed, seed, post-seed, pre-Series A, and then Series A. By the time you get to Series A, quite possibly you could have raised five rounds of financing already. Where in that continuum do you like to play? What is your sweet spot? What are the metrics that anchor a company to qualify for what you are looking for in terms of stage?

Mark Achler: It’s true that nomenclature around stages is changing and evolving. Part of the reason for that is that the time it takes to prove product-market fit and the amount of money it takes to get to that place has shrunk considerably in the last 20 years. It takes far less money and it takes far less time to be able to prove. Therefore what we’re seeing is shorter fundraising sprints.

From our vantage point, we’re classic Series A. You can call it post-seed to Series A. What we really like to see is some traction in that product-market fit; that they understand pretty much who their customer is. What we’re really looking for is momentum in the sales pipeline and an articulation of the sales strategy that is scalable and repeatable.

Sramana Mitra: We had an investor last week. I asked him what the difference was between post-seed and pre-Series A. He did a nice job of defining it. He says that post-seed is validated business model with paying customers but not velocity. Pre-series A is all of those plus velocity.

I thought that was interesting, so let me ask you that question. Do you require velocity already figured out in the system?

Mark Achler: That’s an excellent way of differentiating. The way I said it is momentum in the sales pipeline which is another way of saying velocity. At the end of the day, we like velocity. We will make investments in that post-seed where the velocity isn’t quite there yet. We have certainly made some investments in that space if we really like the team.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Mark Achler of MATH Venture Partners
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