Cybersecurity Private Equity

Cyber TRUST™ Index

129

-0

52 Week

223

120

Index at 100 on January 1, 2020

Option3 combines a cyber heritage from the classified world of national security with investment and M&A expertise from Wall Street to family offices, and operational experience spanning the C-suite. With a portfolio that includes earlier stage, growth and buyout (pending) deals, we primarily seek control investments in mid-market companies, particularly in areas that are national priorities as we build or
assemble leaders of tomorrow.

We identify the true investment whitespaces, the underserved and underinvested frontiers that are critical for the security and resiliency of the country.

We founded Option3 in 2015 as a specialist cybersecurity investment firm with the mission to make high risk adjusted returns by investing in those companies and capabilities that America most needed in the coming five years. In that time, we have invested in 9 companies with 1 under LOI through two separate portfolios, both tracking to deliver strong returns.

Option3’s success lies in combining a deep heritage in the national security community with decades of experience in the investment industry. This combination has resulted in investments that range from seed to our most recent LOI for a mid-market buyout. Our portfolios comprise cutting edge companies focused on priority areas, often coming to us out of the national security ecosystem. Building on the momentum from two portfolios and seeking to leverage our deep operational strength. We now focus principally on control investments in mid-market companies, both through new direct investments and through our new C2 cybersecurity mid-market private equity fund, one of only a handful of cyber funds to focus beyond venture investing.

Investment and Operating Team

Over the past six years, we have successfully built a culture and team that integrates deep cyber expertise gained in the classified world of U.S. national security with investment and finance prowess that arises from decades at major Wall Street institutions, insurance companies, and family offices. The team’s prior C-suite experience cuts across areas from finance to marketing and technology and has an active role in the lives of its portfolio companies, including multiple board seats on all recent investments. For this team, it is understood that both money and mission are of equal importance. Together, the team has successfully managed nine investments, building deep institutional memory of deal origination, diligence and negotiation, followed by years of portfolio management and a growing base of real-world M&A exits. We have built and refined the systems, processes, and benchmarks to the maturity necessary to run ever larger pools of capital. This was recently demonstrated when the team made an internal valuation metric publicly available, transforming it into the newest cybersecurity stock index available in the market today.

Manish Thakur

Managing Partner

Merrick Andlinger

Investment Committee

Michael Schoenbach

Partner

Lisa Donnan

Operating Partner

Dr. Peter Fonash

Chief Technology Officer

Jeanette Kirazian

VP, Finance

Vishal Gaglani

Associate

Headshot of Jennifer
Jenn Sherman

Marketing Director

Chris Woods

Principal

Technology Board

At the heart of Option3’s decision making is its Technology Board. This board assesses each investment we make, while understanding the greatest returns are achieved by focusing on companies and capabilities that America needs most in the next five years. We do not come from the perspective of commercial technologists. We are people who have spent their lives fighting an unseen adversary, largely in the U.S. National Security Community, with former CIOs and board members of such organizations as the DoD, CIA, and NSA forming the core of the Option3 Technology Board. Complementing this is a growing group of former CIOs and senior cyber executives from such companies as General Motors, CISCO, and Hewlett Packard.

John Stenbit

Former U.S. Assistant Secretary of Defense and Current Advisory Board member of NSA

Alan Wade

Former Chief Information Officer of CIA

Greg Akers

Former SVP Advanced Security initiatives, CISCO

Advisory Council

We have built an ecosystem, both formal and informal, of expertise across multiple disciplines that we draw upon in our deal origination/diligence, fundraising, and in growing and ultimately exiting our portfolio companies. The most visible part of this ecosystem is our Advisory Council, located both in the U.S. and in select aligned nations around the world that have capabilities in cybersecurity. The Council brings together domain expertise in legal, finance, marketing, insurance, public relations, and human resources. Some of its members are listed below:

Richard S. Fuld, Jr.

Senior Strategic Advisor, Former CEO of Lehman Brothers.

Sean Plankey

Former Principal Deputy Assistant Secretary, Office of Cybersecurity, Energy Security and Emergency Response, Department of Energy.

Armeane Choksi
Former Vice President, World Bank, Managing Partner of boutique investment bank, and emerging market hedge fund. Co-founder of Option3.
Jamil Sopher
Family Office Investor, early entrant into cyber sector. First outside investor in Option3. Former Senior Project Manager, World Bank.
Jennifer Fearon
Managing Partner of VentureLink Advisers, a corporate finance, business and financial consulting firm. Advising Option3 since 2016.
Christopher Carolan
Partner at Baker & Hostetler LLP. Advisor to Option3 since its founding.

Since its founding, Option3 has invested in nine companies, with one more under LOI. The deals range from early stage to buyout (pending), with four of them being control or joint-control investments. Half of the companies are located in the Washington DC/ Northern Virginia/ Maryland area, with the others spread from the Silicon Valley to Europe. Two of our earlier investments have been realized through company acquisition by recognized leaders in their product areas, while others have seen large unrealized value creation. Our investments have ranged from threat intelligence to data loss prevention – areas that have been prioritized at different times by our sector-selection methodology that is informed by underlying themes driving cybersecurity. Our biggest priorities today lie in protecting real world physical infrastructure, national security, healthcare, and cyber insurance. 

Current investment themes include:

  • Critical Infrastructure
  • Industrial Controls
  • Operational Technology
  • Automotive Security
  • Internet of Things/ IIOT
  • Healthcare IT
  • Cyber Risk Assessment
  • Zero Trust

Option 3 Cyber Special Situations LLC (CS)

Dellfer

Dellfer protected connected devices and apps act as threat sensors. With Dellfer’s comprehensive and continuous protection your connected devices and apps remain safe. The key to cyberattack detection and prevention is awareness.

Onclave

Onclave brings the same level of protection to IoT that our military and Intelligence communities employ to protect our nation’s most critical assets.

Veracity

Veracity’s resilient software-defined industrial network provides an on premises, centralized configuration, control and monitoring solution that tracks all connected devices and their communications.

OPTION 3 CYBER INVESTMENTS LLC (C1)

Centripetal Networks

Provides automated cybersecurity threat remediation by aggregating and applying threat intelligence at a speed and scale unmatched today (providing real-time defense against known bad actors on the Internet).

Certes Networks

Provides a highly proprietary approach to software defined security that will accelerate the $1 trillion communications sector’s transfer from hardware to software, providing enterprises with network security at a scale well beyond the competition.

Successful Exits

Watchful Software

Watchful Software provides user-friendly, data-centric classification and keystroke dynamics that don’t impact your users. RightsWATCH and TypeWATCH are tailored to provide persistent security solutions that prevent accidental and malicious disclosure. As a result, your security protocols are enhanced and compliance becomes the rule.

Logo of OmniEarth
OmniEarth

Pioneered the application of artificial intelligence/ machine learning analytics to satellite/ drone imagery/ sensory data and big data to extract actionable, predictive business intelligence that was previously unobtainable.

Dark Cubed

Dark Cubed is a powerful and easy-to-use cyber security software as a service (SaaS) platform that deploys instantly and delivers enterprise-grade threat identification and protection at a fraction of the cost.

Funds

Option3 has invested largely out of two concentrated portfolios, namely “C1” and “CS”, both structured as SPVs. It is now “advance investing” out of “C2”, a diversified cybersecurity private equity fund that focuses on control investments in mid-market companies.

Option3 Cyber Investments II, LP (C2)

Option3 Cyber Investments II, LP (“C2) differs from most cyber funds in that it seeks to make buyout or control; investments in mid-market companies. In particular, it focuses on those areas of national priority.

Focus on proven mid-market companies

Increased venture capital has fueled a significant increase in early-stage companies, and an increase (albeit smaller) in the mid-market. C2 focuses here, building the platforms of tomorrow.

Invest in Current U.S. National Cyber Priorities

C2 investments focus on areas pre-identified as priorities for the country and is informed by real world events from the push to upgrade America’s infrastructure, blowback from Ukraine, and challenges in the cyber insurance markets.

Control Investment and Active Option3 Management

We seek control in order to make those changes that are sometimes necessary for a company to grow to the next stage. Option3’s operating team brings prior operating experience including prior CEO, CFO, CIO, CMO, CTO roles.

C2 will start with 3 control investments, drawn either from the CS portfolio, or from additional “advance investments” by Option3 in 2022. These span from buyout (pending) and growth equity to a special situation investment that will deliver a new capability being created in partnership with a strategic consortium drawn from the AI, cyber and insurance industries.

 

Dellfer

Series A Round

Joint Lead

Automotive Security

Onclave

Series B Round

Co-Investor

IoT/OT Security

Dark Cubed

Series A Round

Lead Investor

SMB Threat Intelligence
Cyber Insurance

Veracity

Series A Round

Joint Lead

Industrial Controls

Option3 Cyber Investments LLC (O3C1) and Prior Investment

Option3 Cyber Investments LLC (C1) was conceived and launched soon after the company’s founding in 2015 as its market debut investment fund and funded by the Firm’s partners and closely related investors. Its concentrated portfolio, comprising three venture investments, is tracking for returns far outpacing all benchmarks. As of early 2021, this vehicle’s estimated value is approximately $80M, following one exit and a large unrealized gain.

Centripetal Networks
Awarded largest patent award in history

Series A-2 Round

Threat Intelligence

Certes Networks
Series A Round co-investor

Image Risk Analytics

Logo of OmniEarth
OmniEarth
Sold to Eagleview Technologies

Software Defined Networking

Watchful Software
Sold to Symantec

Series A. Convertible Debt

Data Loss Prevention

745 Fifth Avenue, Suite 500
New York, NY 10151

1818 Library Street, Suite 500 
Reston, VA 20190

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