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Understanding the Types of Family Offices: A Guide for Family Businesses

Understanding the Types of Family Offices: A Guide for Family Businesses

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    Understanding Impact Investing

    2 min read Impact investing seeks to fund startups with social or environmental benefits. Impact companies have the intent of providing social or environmental aid and solutions with measurable results. The investment must provide a benefit that is more than what would have occurred without the aid of the organization, a concept referred to as additionality. In this article, we will understand how to predict and measure the impact of your startup’s investment. Indicators of Successful Impact Investment The indicators of a successful impact investment are as follows: Shows a measured impact over time, based on its business model forecast. The company brings innovation that provides for significant impact. The company has a sustainable business model and strong entrepreneurial skills and capabilities. If you have these elements, you have a true impact investment that is making a difference. How To Measure Impact Impact startups need to know and understand how to measure their impact in addition to their financial return. Here are some ways to measure impact: The startup could measure the impact for each unit sold. This works well when the impact is the same for each customer. An example would be a bottle-less solution for water distribution. The startup could measure the impact based on a sample and then extrapolate across the entire business. This works well when the impact is not exactly the same for each customer. An example would be the graduation rate of a student through an education program. Look at comparable solutions with a stated impact and adopt those metrics. An example would be the reduction in carbon emissions based on reduced fuel usage. The startup could then apply that metric to their own user base. Impact investors will look for impact metrics from the startup, so it’s important to measure and track them. Impact Measurements The measure of impact is in the eye of the beholder. What impact you see may not be shared with the investor or company you are working with. Using a measuring system helps offset bias in this regard. There are several systems you can use. Some examples include: GIIRS (Global Impact Investing Rating System): This system rates companies based on social and impact performance metrics. This system is considered one of the primary standards.   IRIS (Impact Reporting and Investment Standards): This system provides metrics for social, environmental, and financial performance of a company.  B Analytics: This system was developed by B Lab, and it provides a tool to assess, compare, and improve impact. SASB Standards (Sustainable Accounting Standards Board): This system provides sustainability standards for over 70 industries. GRI Standards: This system was one of the first to provide standards for sustainability reporting. International Integrated Reporting Council: This system provides reporting with an emphasis on bringing cohesion and efficiency to the reporting process.  The above tools can help immensely when comparing metrics across sectors. Impact metrics In addition to measuring, startups in the impact space should also show their impact metrics. Investors will be looking for the impact metric results. A common mistake by impact companies is to focus on the size of the market to be served and the needs in those markets. Instead, you should measure the actual impact results of your business on the market you are serving and show those results. For example, you can show how many students graduated, how many bottles of plastics were removed from the waste stream, or how many students improved their test scores. Focus on the primary impact on the customer rather than the secondary impact on the employee of the business. There are several metric systems including GIIN’s IRIS+ metrics, the IRIS Thematic Taxonomy, and the Impact Management Project. In short, no one system covers all impact sectors. To learn more about the impact metrics your startup fits, review the UN’s Sustainable Development Goals. Feel free to try out our calculators and contact us if you would like to discuss your fundraise: http://staging.startupfundingespresso.com/calculators/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group.

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    Doing Your Due Diligence

    2 min read There are several approaches to due diligence. The most common is the “Thorough Approach” in which you review each aspect of the business and focus on the top items. The main areas to cover in due diligence are the market and the team. In this article, we will cover how to diligence the market, how to diligence the team, and what key documents you should have in your due diligence box in following the thorough approach. How To Diligence the Market When implementing due diligence in a startup, the size of the market is a key question. The larger the market, the greater the growth potential of the startup. There’s rarely a need to pay for research as so much exists on the web. In searching the web, you’ll find research reports giving market sizes, trends, analysis, and more. The key here is to analyze the market at three levels. The first is Total Available Market which is anyone the company could ever sell to. The second is the Serviceable Market which is the target market the company wants to serve. The third is the Beachhead Market, which is the first niche the company will pursue. Ideally, this is a small but well-defined group of companies that fit the startup’s current product. The startup should have some interactions with the companies in the Beachhead market already. How To Diligence the Team In doing diligence as a startup, the team is the most critical factor in the process. For implementing diligence in the team, first, review the resumes of those who are on the team or plan to join when funding becomes available. Next, look for domain knowledge. Who has it, and how current is it? After that, look for complementary skills. Is there someone who has sales skills and will spend their time selling the product? Is there someone who is going to build the product and will manage either an internal development team or an external one? Outsourcing the product development with no one actively managing it is a recipe for disaster. Next, look at how long the team has worked together if at all. Ideally, the team has some experience working with each other. The more the better. Finally, look at completeness. Many successful teams follow the Designer, the Hacker, and the Hustler formula. The Designer knows the customer problem and plans the product development, including how it will be monetized and promoted. The Hacker is the developer who builds the product, and the Hustler is the one who sells it. Due Diligence Box Key Documents You’ll need to gather your basic company documents for investors to review. In preparing a due diligence box also called a data room, the following are basic documents to include: Income statement Balance Sheet Three- to five-year financial forecast Cap Table including shares outstanding Entity filings (LLC, C-Corp, and Articles of Incorporation) Intellectual Property filings including patents, trademarks, etc. C-level team resumes There may be other documents you may need to add based on your situation. Feel free to try out our calculators and contact us if you would like to discuss your fundraise: http://staging.startupfundingespresso.com/calculators/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group.

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    How to Set Up and Organize Deal Flow

    2 min read Deal flow is key to successful startup investing. It can take a substantial amount of time for the startup investor, so it’s important to build a strong process for managing it. A well-structured and organized deal flow lead to maximum efficiency for the startup investor. In this article, we will learn how to set up deal flow, how to organize it, and how to automate the process How To Set Up Deal Flow Start with these key steps for running deal flow: Set up a deal flow source with angel groups, venture funds, online portals, and others. Capture key deal information into a software tool. Run an initial screen to see if a deal meets your criteria- have 3-5 key points to check. Set up a first call to find out more details. Update the deal flow software with the results. Set up a partner meeting to review the deal with others in your fund, syndicate, or network. Negotiate valuation and terms. Perform diligence on the deal. Close the investment. Set tasks and reminders for ongoing follow-up and reports. In each step, capture the results into software. Ask the following questions to aide in this process: Which sources gave you the best deals? How much time did the calls take to capture the necessary information to decide? What key factors died the startup need to go all the way through to funding? After anaylysis, update your process to screen out details that wont make the cut. How To Organize Your Deal Flow It’s important to keep your deal flow process organized and efficient. Below are some poiters on how to keep your deal flow well organized:  Set up a separate email for deal flow and use it to capture deals from websites, social media, and other sources. Have everyone on the team send any new deals to that email address. Take all submitted deals and place into a CRM with contact information, sector, stage, and other key information. Update that record with the deal status and next steps. Create a series of follow-up emails to send to those in the deal flow pipeline such as how your deal flow process works and when to expect a follow up. Develop a process for screening the deals for basic criteria and send “pass” notices to those deals that don’t meet them. Set up calls with those that meet the criteria to qualify them and move them through your standard process. Run reports to understand the deal flow and how well it is providing quality deals. It’s important to review your successfully funded deals for key information so you can prioritize those deals for follow up. How to Automate the Deal Flow Process When your process is well organized, you can automate to achieve maximum efficiency. Some key pointers to help you automate the process include: Standardize the information you collect by using forms on the website. Capture referral partners or sources so you can measure the results. Collect the startup submissions to run metrics and track progress. Use well-structured data sets so you can apply automation tools for analysis and data pulls from other platforms and software applications. Set up search tools to look up the founder and company to provide background information. Maintain a filled-out dataset to enable running reports on trends on the deal flow such as sector, stage, and fundraise amount. Capture information from online databases such as Crunchbase and other tools to fill out more details. Feel free to try out our calculators and contact us if you would like to discuss your fundraise: http://staging.startupfundingespresso.com/calculators/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group.

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    Guide To Startup Ecosystems

    2 min read If you are a serial entrepreneur or are otherwise serious about startups, building a startup ecosystem may be an attractive option to you. Startup ecosystems provide built-in connections and ongoing support, making the growth of a startup from the grassroots stage to a mature business far easier to manage. In this article, we discuss the best way to begin building your startup ecosystem. What Is a Startup Ecosystem? A startup ecosystem is a network of startups, investors, and others who come together to foster startup formation and growth. At the core of the network are startups led by founders who launch high-growth businesses. This network encourages innovation through shared resources such as capital, talent, and mentorship. Each member in the network has something to offer: Accelerators and incubators: provide education around the initial launch Investors: provide potential capital Universities: provide talent for launching and supporting startups Freelancers: provide additional talent in the form of labor Providers: offer support for legal, financial, marketing, and other services Mentors: provide coaching and guidance on how to grow the business How To Build a Startup Ecosystem In building out your startup ecosystem, consider these points: First, investigate every kind of funding and consider where it may fit into your overall funding plan. It’s most likely that you will use two or three types of funding over the life of your business. To understand the type of funding you should look for, ask: “How will you pay the investor back?” For example, equity funding should be considered if you plan to pay back when you sell the business. On the other hand, if you plan to pay back out of the company’s cash flow, then debt funding is a better choice. If you have a consumer-facing product, consider crowdfunding which offers both debt and equity options. Break your funding down into parts, and consider using more than one type of funding for your business. How to Prepare for a Raise Before launching your fundraise campaign, prepare your business, complete your investor documents, and build your investor network. Start with a group of entrepreneurs interested in startups and meet regularly. Encourage startups to share their projects and invite others to support through coaching and making introductions. Set up a blog and publish a newsletter each week on startup activities in the area. Interview startups and investors. Build a resource list for all startups to use. Recruit lawyers, accountants, and other professionals to join the meetings and support early-stage companies. Set up events such as pitch sessions and happy hours to expand the network and recruit more people into the community. Put the group on website lists for startup communities to generate awareness. Set up a coworking space to give startups a place to work. Recruit startup programs to your area, such as the 3 Day Startup, to provide additional programming. Start small and grow your startup community through regular meetings and consistent newsletter mailings. Remember that your role in building a startup community is to create connections and networks for players in the space. Therefore, facilitating communication and connection is key. Feel free to try out our calculators and contact us if you would like to discuss your fundraise: http://staging.startupfundingespresso.com/calculators/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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    Overcoming Common Investor Biases

    2 min read In this article, we look at five common investor biases.  It’s natural to have biases – we all do. We’re only human after all. However natural or not, some of these biases may be interfering in our relationships with our startups. It’s important to be aware of these biases so that we can do our best to overcome and understand them. Overcoming these biases can help strengthen your startup relationships and your deals. Who knows, you may even break through a current issue with a startup and see a higher return on investment. Bias Blind Spot The bias blind spot is a cognitive bias defined by Wikipedia as the tendency to see oneself as less biased than other people. To clearly identify more cognitive biases in others than in oneself. All investors have blind spots and biases, investing in experiences causes one to be biased unconsciously. To overcome biases, focus on self-awareness. Learn more about the common types of bias such as anchoring and confirmation bias. Pay attention to how you react and respond to different pitches. Question your judgment to see if it’s based on fact or on personal feeling or opinion. Identify what type of deals and founder types make you uncomfortable. Question your judgment process to see where it may be flawed. Are you biased against certain types of people because of past experiences? If certain types of startups and founders make you uncomfortable then spend more time with them. Becoming familiar with them will make you more aware of potential biases you may have. Self-Serving Bias The self-serving bias is a cognitive bias defined by Wikipedia as the tendency to claim more responsibility for successes than failures. Investors use successful investments as proxies for their skill but attribute the failures to other causes. Investors are naturally optimistic, and when things go wrong it’s easy to blame external factors. To overcome the self-serving bias, consider the following: Maintain awareness about the self-serving bias. Check yourself when giving yourself the credit and give credit to other factors for success. For failures, take some time to review it so you understand it well. Make yourself accountable for any failures on your part. And look for ways to improve your skills and process. Selective Perception Selective perception is a cognitive bias defined by Wikipedia as the tendency for expectations to affect perception. Investors tend to see what they want to see in a startup deal. Investors choose those elements in the pitch that match their experience and expectations. Selective perception comes from previous experiences with startups both good and bad. Make sure you are an active listener, truly hear what the person speaking is saying. Ask questions to confirm understanding and that you heard correctly. Check with other investors for their perception to see how it matches and differs from your own. It’s easy to focus on parts of the deal that matches your understanding and ignore those elements that don’t fit.  Stereotyping Stereotyping is a cognitive bias defined by Wikipedia as expecting a member of a group to have certain characteristics without having actual information about that individual. Investors can stereotype startups based on their previous experience. This can be a bias against a sector of business, a leadership style, or other. To overcome stereotyping, investors should set aside preconceived notions and examine the facts available. Investors should look at the deal, the team, and the market as a growth opportunity. Look at similar investments by other investors to learn more about the deal. Investors need to generate self-awareness to understand biases that come into their decision-making. Staying in the know will make changes easier as the startup world is constantly changing. Out with the old and in with the new.  Reactive Devaluation Reactive devaluation is defined by Wikipedia as devaluing proposals only because they purportedly originated with an adversary. Founders tend to ignore and or discredit lessons and or advice given by their competitors as they see it as just that, their competition, and how would their competition know better than them.  To overcome reactive devaluation, consider the following: Maintain awareness of reactive devaluation and watch for it when making decisions. Separate yourself from the situation and view it as an impartial bystander to evaluate the information without bias. Consider the same information but coming from another source.  Would you perceive it differently? Check with others about their view of the situation and if the information is worthy of consideration. If so, review the information with other founders to verify it is legitimate. It’s helpful to separate the information from its source in order to remove any bias either for or against it. Feel free to try out our calculators and contact us if you would like to discuss your fundraise: http://staging.startupfundingespresso.com/calculators/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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    Five Investor Biases You Should Watch For

    2 min read Whether you are a new investor or you have been in the industry for decades, you may be falling prey to one of these common investor biases. Read them, study them, maybe even write them down and keep them on your desk. The more familiar you become with these biases, the easier it will be for you to avoid them and make fair and profitable decisions going forward.  Confirmation Bias Confirmation bias is a cognitive bias defined by Wikipedia as the tendency to search for, interpret, focus on and remember information in a way that confirms one’s preconceptions. Investors bring their recent investment experiences to funding new startups. If the investor recently lost their investment on a deal in a specific sector, they will most likely look unfavorably on other deals in that sector. On the other hand, if the investor found success in investing in a particular type of company, then most likely, the investor will look for similar companies. It’s important to understand these forces when setting up an investment thesis and a criterion for funding startups.   To overcome confirmation bias, consider the following: Try to view the deal from other angles than you traditionally use. Ask other investors for their view on it and note the ones with strong objections. Discuss your thought process with other investors to see where you might be off the mark. Expand your connections to include people with different experiences and viewpoints. Give prominence in your thinking to views divergent from your own.  Courtesy Bias Wikipedia defines Courtesy bias as the tendency to give an opinion more socially correct than one’s genuine opinion to avoid offending anyone. Courtesy bias arises when an investor tells the startup what they think it wants to hear rather than what the investor thinks. The investor spares the feelings of the startup but, in the process, withholds feedback the startup needs to hear.  Feedback should be candid, even if it’s not all positive. If the feedback is all positive and negative, it may signify that the investor is under courtesy bias. Consider giving a more balanced view of the startup with both positive and negative feedback to learn from the experience and have something to work on. Another form of courtesy bias is investors who hide their social, political, or other leanings. For example, some investors believe that only those from their social or political circle are reliable investments, but they call out some other facet of the startup for passing. To overcome the courtesy bias, investors should take note of the deals they fund and identify factors swaying their decision. Present Bias Present bias is a cognitive bias defined by Wikipedia as the tendency of people to give more substantial weight to payoffs that are closer to the current time when considering trade-offs between two future moments. Early exits weigh stronger on investors than further out exits, even if substantially larger. Under present bias, investors forgo longer-term gains for immediate gratification. To overcome present bias, consider yourself in the future compared to today. Ask what your future self wants rather than your present-day self. If holding the investment longer will make your future self happier, that can outweigh what your present self wants. Another way to overcome present bias is to set goals and criteria for buying and selling and use those for determining when to buy and sell.  Finally, the time value of money measures how much future returns are worth based on the time to return. By using these calculations, you can see the quantitative difference between the two investment choices.  Shared Information Bias The shared information bias is a cognitive bias defined by Wikipedia as the tendency for group members to spend more time and energy discussing information that all members are already familiar with and less time and energy discussing information that only some members are aware of. Investors focus on information their investor group already knows and talks about but spend less time on information not well understood. In diligence, investors focus on the areas they already know and give less attention to the unknown areas. To overcome shared information bias, consider creating a checklist of critical topics to discuss and move the group forward through the list. Give weight to the voices discussing diverse opinions. Look for those who have experience with the topics and highlight their views. Expand your group to include others who have more varied experiences. Capture the dialog into written form for a follow-up review. It’s easy to talk about the things you know and more challenging to discuss new things. Hindsight Bias Wikipedia defines hindsight bias as the tendency to see past events as predictable when those events happened. Early indicators come back to the investors ‘ minds when an investor witnesses a startup fail or succeed. In some cases, investors selectively remember specific events or facts that later confirm the outcome, leading to overconfidence.  If one believes he can predict the outcome, he’ll make mistakes erroneously, thinking he can envision the result of any startup. Often, success or failure is a combination of market selection, timing, team dynamics, and not just one facet of the business. To overcome the hindsight bias, remember you cannot predict the future. Review the facts of the startup and not just how you feel about it. Write out your thought process, including the facts at hand and the justification for investing. When the investment outcome becomes known, you can refer back to the notes to check your decision-making. Consider other outcomes aside from the one you expect and keep an open mind throughout the process. Build a decision-making process and focus on it rather than guessing the outcome.  Read more in the TEN Capital eGuide: http://staging.startupfundingespresso.com/startup-and-investor-biases/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email:

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    Everything You Need to Know About Deal Flow

    2 min read Deal flow is critical to successful startup investing as it gives you experience with founders, valuations, exits, and many other aspects of the startup process. It teaches you a great deal about the market, current technology, and the startup ecosystem. So, how do you know which startup investment offers the best deal flow? Read on below to find out. Best Practices When it comes to deal flow, quality over quantity is key. The better the deal flow, the better your investment outcome. Here are some practices you can consider to help ensure better deal flow, and therefore better investment: Automate your deal flow process as much as possible by capturing consistent information into one application. Track deal flow sources and analyze on a regular basis. This shows where the best deals are coming from and where to spend time. Use online data sources to augment your deal flow information. This step helps make follow-up decisions easier to figure out. Monitor your deal flow activity for changes. This shows the impact of the market and conditions and signals for a change in follow-up. Set up workflow processes so the deal goes to the right people in the proper sequence. Flag your most important deals to make sure they don’t fall through the cracks. Optimize your system for your deal flow by gathering only the relevant information. Connect your deal flow system to your email and other systems to integrate into the overall workflow Remember that deal flow can be expensive in time and money, so it’s important to apply these steps to reduce the end cost. Finding Deal Flow It’s important to set up sources to provide quality deal flow on a consistent basis. Here are the steps to set up your deal flow sources: Map out the entrepreneurship and funding groups in your geographic area or sector. Use the web and social media searches for an initial pass. Check out universities for their entrepreneurship programs, including business plan competitions and accelerators. Review the Chamber of Commerce for the trade associations for your area or sector to find programs related to startups. Meet with venture capitalists, angel groups, and other investors in your sector or area. Map out the accelerators, incubators, makers markets, and other groups that support aspiring startups. Identify lenders such as banks, factoring companies, and equipment leasing companies, and more who may have deal flow. Create and maintain a calendar of events to track their activities. Reach out to those groups on a regular basis to offer support such as education, mentorship, and coaching. Consider creating a newsletter to share with those in your sector or community to foster the relationship. Start with those in your network to gain access to their deals and offer to return the favor. Seek out quality accelerator programs to find more resources. Consider joining an angel network for deal flow, as you can share the feedback with others. Join online portals with the deal flow so you can learn the current state of valuations, technologies, and sectors. Reach out to venture capital, family offices, and other investors to join as a syndicate partner in their deals. After following these steps, be sure to follow up in order to support the best sources of deal flow and increase your engagement with those groups. Never fall into the trap of thinking that you have enough deals under your belt- the greater number of deals you review the more choices you have, and the more you know about the market. Feel free to try out our calculators and contact us if you would like to discuss your fundraise: http://staging.startupfundingespresso.com/calculators/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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    To Invest or Not to Invest

    2 min read In the startup world, everyone has a grand idea, but how do you know when to invest? The startup needs more than just goals in the slide deck; they need systems in place to accomplish the goal and show the growth story in progress. As an investor, how do you know which startups can talk the talk and walk the walk? There are characteristics to look out for in a startup that raise either green or red flags. When to Invest After you have applied the traditional investment thesis to the startup’s plans, check for the following positive traits: There should be a strong team with integrity, industry knowledge, and business experience. They should have product validation and market validation, meaning that the product works and people will pay for it. The startup should already have the prospects for high growth and be demonstrating this at some level now. The business needs to be scalable and something that other companies will want to buy into eventually. The potential return needs to be significant to allow you as the investor to reach a 44% IRR or better. Finally, you need to help the startup in some way, such as finding other investors, providing domain knowledge, or making other meaningful connections for the startup. When Not to Invest There are traits you can look for that will tell you not to invest in the startup. Here is a checklist of showstoppers: There’s no business plan, as well as no plan for an exit. There’s no vision for the company. There’s no growth in the target market. The business doesn’t provide enough of a return on investment. The team has too many holes to stand up. The projected growth rate is too high and is unrealistic. There’s no differentiation over the competition. You should also beware of the “Pretend-preneur,” the entrepreneur who likes the idea of running a startup but is not committed to the work required to make it a success. Here are some tell-tale signs to watch out for: They are overly worried about job titles and credit for the work. They don’t seem too focused on the customer and what it will take to make them happy with the product. They view this as a “detail to figure out later.” They focus on the superficialities of the business and not the core functions of building the product and selling it. They look for ways around the hard work rather than working their way through it. Problems are the fault of everyone else, and there’s nothing that they can do about it. They don’t know who their customers are, and this doesn’t bother them. They think funding will solve all problems and life will be easier after the raise. They don’t know their numbers, but someone else in their organization does, and that’s good enough. Making The Final Decision The decision to invest or pass is entirely up to you. No one knows what the future may hold. But we can make the most informed, rational, and logical choice possible in this scenario. Taking the positive and negative characteristics lists above into consideration, you can use the process of elimination to remove deals from your potential investment list, allowing you to focus on the ones that can bring success to you and your team. Read more about how TEN Capital can help you find the right deal-flow: http://staging.startupfundingespresso.com/investor-landing/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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    COVID-19 Impact on the Cybersecurity Space

    3 min read What do investors see as the COVID-19 Impact on the Cybersecurity Space? The fact that COVID has impacted nearly every aspect of our daily lives is not new information. The way we live, connect, work, and play has been directly impacted. As our lives moved online, the web evolved and adapted to our increasing dependence on it. This led to increased vulnerabilities and therefore increased attacks on personal and corporate information. The cybersecurity sector has been adapting to keep up. In doing so, players in the space have gained new insight on more efficient ways to move forward. COVID-19 Impact During the last year of lockdown, working from home has left the workforce more vulnerable to malicious attacks and created specific challenges in the cybersecurity space. Employees are using their own devices to log into networks, exposing themselves and their personal information more now than ever. Corporate IP is suddenly at risk of invasion, and as a result, there’s new funding, and therefore solutions, aimed at those particular issues. People have become increasingly comfortable working remotely, putting a huge amount of pressure on the IT environment to decentralize. At the same time, in America alone, 300,000 jobs in cybersecurity are currently unfilled. There aren’t enough skilled workers to fill the industry’s current needs. In the next 12 months to 18 months, we will likely see a boom in the space as people recognize this trend, take the time to get the required education, and fill the need. We’ll start seeing more opportunities for the cybersecurity space. We will likely see many of the technologies that depended on the old environment struggle to keep up in the new remote world, leading to consolidation within the industry. Privacy Needs We’re seeing a trend around privacy in cyberspace as people now recognize their data is being used (and misused) overall, and they’re not getting compensated for it. At the same time, the amount of information leaks is increasing exponentially, leading to corporations and individuals demanding better privacy protection. Ten years ago, everything was centralized; employees were in offices and accessing the corporate network through a VPN. COVID flipped this scenario on its head, and now people are not only working remotely but from a variety of places, each with their own unique internet connections. They’re using personal devices, not always their own, that have systems that might be calling out to nefarious servers. The exposure to the opportunity for hackers to take advantage is now rampant, and the understanding of the corporate environment is more confused than ever as they’ve lost some control and understanding of their own systems. Back to Basics The cybersecurity space has experienced a resurgence of “back to the basics”. The industry has been around for about twenty years, but there has been a massive explosion in investment, major acquisitions, and new companies in the last five years. One of the patterns presenting itself in all of this is that we’re going back to a lot of the basics that a good security program is built on. Questions like “Before I think about securing my stuff, where is all of my stuff?” and “What are all the accounts that we have?” or “Where are all of our servers? Our data centers? Our users?” are now back at the forefront. Due to this reverted mindset, more companies focus on fundamentals such as asset management and attack surface, leading to specialization. We’re starting to see more security companies avoiding solving all of the issues, instead simply wanting to make the user more efficient at X or to increase efficiency in generating returns to the user rather than completely claiming to protect the customer from the user cataclysmic breach. Read more in the TEN Capital eGuide: http://staging.startupfundingespresso.com/investor-perspectives-on-the-cybersecurity/. Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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