Jerusalem Venture Partners’ Michael Carus sees three categories of venture capitalists operating in these particularly dodgy economic times.
The first are those who are so occupied with a list of truly awful portfolio companies that they spend all their time sorting through the corporate carnage they’ve created for themselves. The second are firms that are managing a more solid list of portfolio companies, but are sitting on the sidelines afraid to invest in new companies.
The final category includes VC firms doing what investors “expect us to do,” says Carus, a newly-minted JVP general partner, “which is to extract from this environment companies and technologies that will survive, and go on to excel and become the next big companies of the future.”
Not surprisingly, Carus puts JVP in that last category, among the firms out there still investing.
Whether JVP’s latest investments will turn out to be the corporate world’s next giants is fodder for crystal balls. What is certain, however, is that JVP, with $650 million under management, has been among the most active VC firms in a year when new deals have been especially sparse.
When every VC is talking about getting back to basics, JVP is backing that talk up, and has closed four new deals since January, including investments in Mahi Networks in June and Cyber-Ark in March. (The other two include a semiconductor company and a wireless infrastructure company.)
JVP’s $6 million investment in security software company Cyber-Ark illustrates the core tenets JVP requires when investing in a company in these tough times, Carus says.
“It’s not enough to find companies that are dealing with the next cutting-edge technology,” he says. “In addition, they must have a proposition that saves money, improves efficiencies and improves the revenue potential for customers.”
Cyber-Ark, headquartered in Dedham, Mass., with research and development in Lod, Israel, has developed software that allows organizations to share information with partners, customers and remote offices through what it calls a secured data vault – a platform that combines 10 layers of security, including firewall, virtual private network and access control.
When looking at a potential market, it’s not sufficient to look at a projection of size as it was in the past, Carus says. Today’s economic environment requires that there be size, yes, but that the market is real and receptive to a technology. “The team came to a basic agreement that the world is moving toward a more converged environment,” Carus says. “And in the broader converged world that we work, businesses all over are going to want what Cyber-Ark is offering. It’s not good enough to just throw good technology at a market and assume it will get picked up.”
Add to that an experienced management team that came from Checkpoint, one of the leading security software companies in the world, and the Cyber-Ark deal fell into place. Once those elements are in place-the technology, the market and a mature management team that has done it before-“then you start to have a little less fear in the marketplace,” Carus says.
Contact Michael Copeland