Startup foundries can help transform government ideas for public protection.
The wave of technological change that has transformed almost every aspect of American society is also forcing the intelligence community to change. The U.S. is at an inflection point in terms of its competitiveness and technological advancement against nation-state rivals that have moved online. This national security shift is why the government is devoting large resources to the development of next-generation cybersecurity technologies.
Many today forget that Silicon Valley is a byproduct of massive federal government investment during World War II. The National Security Agency, U.S. Cyber Command, National Institute of Standards and Technology, NASA and other government agencies are all pushing budget dollars for offensive and defensive operations against nation-state adversaries. In response, a large population of cyber-related engineers has developed around D.C. In 2018, the national capital area graduated more engineers from its college system than any other region in the nation.
As part of this effort, In-Q-Tel is a strategic investor that identifies and accelerates innovations to support the mission of the U.S. intelligence and defense agencies. The firm has been putting money into some of the most promising cybersecurity technology companies for years. The purpose of this investment is not growth or return on investment: It’s to inject commercial technology into the government. That’s great for top-secret government protection, but what about the private sector? There are ways to get this improved cybersecurity protection to the broader public in a much faster way.
When focused on cybersecurity, a new startup foundry approach is the opposite of the In-Q-Tel model. Both models look for the most promising cybersecurity technology. But a startup foundry approach takes aspiring entrepreneurs with next-generation cybersecurity knowledge and gives them a startup environment where they have every advantage. This spreads the cybersecurity benefits far wider and faster than the In-Q-Tel model, while also unlocking potential billions in economic value.
Building cyber and data science products for U.S. and European businesses—the customers who are being hit the hardest—could make our economies and companies stronger.
This model just requires a cutting-edge team and technology, rather than the initial market traction desired by most investors. I’ve seen some companies come straight out of the NSA with just an idea. The model also focuses hard on the founders. Do they have the emotional intelligence to be a strong chief executive officer? Some do, and some might need the support of an experienced CEO to be added. Startups in this model receive millions of dollars of free in-kind services—support services like legal counsel, marketing and product management—within a 12-month time frame. Full-time, seasoned executives embed into the startup from day one.
All this support accelerates growth and cuts the time the new technology can be put to work protecting American companies, government agencies and citizens. For example, over the past four years globally the average cybersecurity startup took 21 months to complete an A round from their initial seed. Over the past four years, we have seen companies completing A rounds within 13 months of initial seed investment.
The startup foundry model fills an important niche in the spread of better cybersecurity. Too many cybersecurity startups have had to rely on angels or small VCs. The In-Q-Tel model has seen some successes, but it doesn’t develop technology fast enough and is not designed to share cybersecurity advances with the private sector and the public.
The status quo isn’t good enough with online dangers multiplying daily. The leading minds supporting our country in cyberspace need a way to share their innovations faster with the public. The new investment model provides a proven way to “productize” cutting-edge cyber research and let private companies and citizens benefit faster. It’s the right fit for the dynamic cybersecurity industry, making the online world a safer place for all American companies, government agencies, and citizens.
Tony Surak is the chief marketing officer of DataTribe.