Over the last three years, Steve Herrod, managing partner at General Catalyst, has taken an equity position in a number of security startups, and looked at hundreds more possible candidates.
When evaluating a potential investment, determining if a technology is actually enough to build a company or if it's actually just a feature is a key consideration for Herrod. In a video interview with eWEEK, Herrod discuses his investments in Anomali, Menlo Security and Illumio as well as his criteria for picking technology winners.
Overall, Herrod sees isolation-type technologies as the next big wave of security innovation as organizations increasingly come to the realization that not all threats can be blocked at the perimeter. The basic idea with isolation is that when bad things do get through, by having isolation, the risks can be minimized.
When it comes to picking investments, Herrod noted that understanding what makes a technology idea a company and not just a feature is a process he understands well. For starters is the revenue potential for the technology. That is—how big of a sales deal is possible?
"If you're not signing a deal with a big company that's over $100,000, you're probably not providing something that has a big enough impact to be a company in its own right," he said.
Herrod added that it's also important to understand the dependencies of a given technology in order for it to be useful. If the only way a technology can work is by being added to another tool, there may be less value in it being a stand-alone company.
"At the end of the day, the problem set that you're solving has to be big enough or important enough to get the attention over the 500 other startups in the market," Herrod said.
Watch the full video with Steve Herrod below:
Sean Michael Kerner is a senior editor at eWEEK and InternetNews.com. Follow him on Twitter @TechJournalist.