Peter Kuper: No Help for the Little Guys

The latest VC data continues to reveal the pressure on private companies needing capital. The steady decline that began over two years ago is still continuing its downtrend.

Source: Thomson Reuters, National Venture Capital Association

This is definitely not a good thing, as we have consistently looked to the private sector to develop the next-generation solutions needed to keep up defenses against the ever-evolving hacker community. The problems go beyond the money - even if the fortunate few see deposits in their corporate checking accounts the valuations of these investments add to the burn.

Source: Cooley, February 2009

These trends further support our look to the government initiatives such as I4 as the private sector is under stress. The cynic in us can’t help but touch on the topic of bailouts for all the big boys, be they banks or botched auto companies, but what about the smaller players - the ones with the normal assumption of real job growth, let alone the real innovation that produces new products and whole product categories?

 That said, we know of a very large group of private companies that are doing very well, including BigFix, Verdasys, and Qualys. Overall, we still recommend buyers look to the privates, especially given some of the antiquated wares of the public companies. Yes, they may be financially stronger -- but what protection are you getting for your scarcer dollars?

 Our recommendations have centered around:

• Product strength (worth the risk of linking up)
• Management team (ability to execute)
• Investors (history, viability of the backers)

 Overall, we still endorse the private sector but need to caution IANS members to check out the firm before they “leap”. This applies to public companies as well - just because you’re big doesn’t mean you can’t be bought, as we have seen from the original ISS acquisition and more recently the previously-envied Sun Microsystems. We’re watching that deal very closely to see which Identity & Access Management solution service is phased out in favor of the other. Costs still matter, no matter how big or small.