Evolution Fairness Companions raises $1.1B for brand new cybersecurity and AI fund

Cybersecurity has had a tough go of it recently, with investment within the sector dropping a precipitous 40% in comparison with the 12 months prior. However there are promising early, even preliminary, indicators of a restoration.

The overwhelming majority of chief info safety officers reported higher budgets for 2024, based on the cybersecurity-focused VC agency NightDragon. And, regardless of decrease total funding within the cybersecurity business in Q1 2024, the variety of offers elevated in comparison with Q1 2023, per recruitment outfit Pinpoint.

It’s in opposition to this backdrop that Evolution Equity Partners, a development capital funding agency based mostly in NYC, on Tuesday launched a $1.1 billion cybersecurity and AI fund, the third such fund in Evolution’s historical past.

The fund — Evolution Know-how Fund III — was oversubscribed, with participation from current and new endowments, sovereign buyers, insurance coverage firms, foundations, fund of funds, household workplaces and angels. It’ll pursue investments starting from $20 million to $150 million in cybersecurity corporations and startups leveraging machine studying and AI to construct “market-leading” platforms, Richard Seewald, managing associate at Evolution and one of many agency’s founders, informed TechCrunch.

“The Evolution Technology Fund III has already backed fifteen leading cybersecurity companies, initiating its investment period over 12 months ago,” Seewald mentioned. “We expect to invest in a portfolio of up to thirty companies in the present fund. We’ll work with management teams and founders, providing them with support and insight in areas including sales and marketing, product technology, human capital, M&A and business development, really enabling them to excel.”

With Evolution Know-how Fund III, Evolution’s technique will probably be to order ~75% of the $1.1 billion complete for early-growth-stage firms, ~15% for later-growth-stage startups and ~10% for earlier-stage VC tranches, with investments to be made not solely in North America however in Europe and Israel — a hotspot for safety tech.

“Our strategy is to invest that fund in a diversified portfolio across the different stages of maturity,” Seewald mentioned. “We believe that provides private markets investors with diversified exposure to cybersecurity opportunities.”

ESG will probably be one other issue, based on Seewald.

“Evolution is committed to integrating material environmental, social and governance (ESG) criteria in its investment processes and ownership practices,” he mentioned. “We actively engage with our portfolio companies creating diverse boards and leadership teams bringing varied perspectives to decision-making processes, reducing the risk of groupthink and enhancing accountability.”

We’ll maintain them to it.

Evolution, which has workplaces in Palo Alto, London and Zurich along with New York, was based in 2008 by Seewald and Dennis Smith, who met whereas working collectively on the cybersecurity large AVG (now owned by Avast). J.R. Smith and Karel Obluk — the previous CEO and chief scientist at AVG, respectively — joined Seewald and Smith to begin Evolution after AVG went public.

Evolution’s 30-person groups manages round $2 billion in belongings and has backed 60 firms so far; its previous fund was $400 million. Amongst a few of the agency’s extra profitable bets are Arctic Wolf (which is planning for an IPO), Talon Cyber (which is reportedly in negotiations with Palo Alto Networks for an M&A deal), Snyk, Aqua Safety, SecurityScorecard and Carbon Black.