WEBVTT - ForgePoint Fund II Focuses on Cybersecurity

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<v Speaker 1>This is Bloomberg Business Week with Carol Messer and Jason

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<v Speaker 1>Kelly on Bloomberg Radio. All right, always looking for a

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<v Speaker 1>little more security in the real world, in the cyber world,

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<v Speaker 1>which is increasingly important, especially I think as we talk

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<v Speaker 1>about elections, it being a presidential election year, and we

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<v Speaker 1>want to understand where the money is going. And we

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<v Speaker 1>got the perfect guy to talk to talk about that,

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<v Speaker 1>and that is Alberto Jepez. He is the co founder

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<v Speaker 1>and managing director of Forge Point Capital, joining us on

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<v Speaker 1>the phone from San Francisco. Got a new fund all

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<v Speaker 1>about cybersecurity. Alberto, thanks for joining us, Thank you for

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<v Speaker 1>the opportunity. Good to be here. So tell us about

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<v Speaker 1>this fund. What gave you the idea and the impetus

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<v Speaker 1>to get it off the ground. Well, this is our

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<v Speaker 1>second fund. We started um with our UH Focus Fund

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<v Speaker 1>in cyber security in seventeen when we raise our first fund,

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<v Speaker 1>which was three million, and we invested in seventeen companies.

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<v Speaker 1>And since the first fund, the industry is almost double

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<v Speaker 1>in size and in importance. And now we raise a

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<v Speaker 1>fund that is UH millions or we have about seven

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<v Speaker 1>fifty million under management, which puts us to be the

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<v Speaker 1>largest cybersecurity venture fund in the in the market and

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<v Speaker 1>the need, the importance. You got it. It's not only

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<v Speaker 1>for governments, individuals and businesses because cybersecurity has to be

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<v Speaker 1>embedded in everything we do. Yeah, no doubt. You know, Jason,

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<v Speaker 1>I were saying, excuse me, Alberta before we got going,

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<v Speaker 1>is how often we have you know, a CEO or

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<v Speaker 1>an executive coming on with a new cyber security startup

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<v Speaker 1>fund or not a start up fund, but another company

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<v Speaker 1>like that is where folks are spending their money. And

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<v Speaker 1>there's a lot of companies out there. So give us

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<v Speaker 1>an idea because I do feel like there's so many offerings.

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<v Speaker 1>What will guide your investments? You know, unlike many of

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<v Speaker 1>our other venture funds, were exclusively focused on on cybersecurity,

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<v Speaker 1>which gives us tremendous insights in the industry. In the

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<v Speaker 1>level of experience that we have in the team, about

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<v Speaker 1>seven investment professionals has spent their lives in cybersecurity as entrepreneurs,

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<v Speaker 1>investors and corporate executives. So that insight gives us an

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<v Speaker 1>opportunity to be close to what we call our advisory council,

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<v Speaker 1>where we have about sixty very active uh cybersecurity professionals

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<v Speaker 1>that really gives us insights about what are the problems

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<v Speaker 1>they're trying to solve. These are many c i o's

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<v Speaker 1>chief security officers, chief trust officers from the largest businesses

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<v Speaker 1>that gives us the insight or what's needed. We work

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<v Speaker 1>with also their entrepreneurs that help us that the solutions

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<v Speaker 1>and also with board members or industry leaders that can

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<v Speaker 1>help us make the right selections. So giving that insight

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<v Speaker 1>and giving that group that we actually call our Cybersecurity

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<v Speaker 1>Advisory Council, we get insights about which areas that we invest,

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<v Speaker 1>so which areas are people talking about about cybersecurity. So

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<v Speaker 1>you you know, the biggest issues that we have is

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<v Speaker 1>the number and sophistication or cyber attacks is only increasing.

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<v Speaker 1>We have new technologies that need to be protected in addition,

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<v Speaker 1>we have a huge shortage of cybersecurity professionals. As such,

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<v Speaker 1>then we need to figure out on ways we can automate.

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<v Speaker 1>We can use machine learning and other technologies to be

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<v Speaker 1>able to help address the biggest issues that we have.

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<v Speaker 1>And so Alberto tell us about the investors, the type

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<v Speaker 1>of folks who are putting money UH into your fund,

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<v Speaker 1>because we certainly have seen a lot of as Carol said,

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<v Speaker 1>a lot of interest on the institutional and the and

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<v Speaker 1>the sort of high net worth individual side and trying

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<v Speaker 1>to get invested in this area. Talk to us about

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<v Speaker 1>the fundraising environment. This environment is looking for specialized funds.

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<v Speaker 1>You know, the generalist fund is interesting to them, but

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<v Speaker 1>they're looking for people that really focus on the in

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<v Speaker 1>the in the area, and so it's fourth point for them.

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<v Speaker 1>They like the fact that we were very focused on

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<v Speaker 1>cybersecurity and our track record. So the people are invested

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<v Speaker 1>in the fund. Our corporate UH corporations, UM, we have

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<v Speaker 1>ancient plans, we have endowments, we have high network individuals

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<v Speaker 1>and family offices. So they're all coming together and and

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<v Speaker 1>and they're very interested in not only that, the actually

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<v Speaker 1>investments that we do, and they're often benefit from the

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<v Speaker 1>insights we provide to them and their corporations and their businesses.

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<v Speaker 1>So I do think about our audience who's listening, because

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<v Speaker 1>you know, we've talked a lot about private versus public markets,

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<v Speaker 1>and I think investors are increasingly interested in funds like yours.

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<v Speaker 1>You know, UM, a lot of you know, more of

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<v Speaker 1>the private markets that's going on. So in terms of

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<v Speaker 1>are you expecting there's going to be more fun similar

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<v Speaker 1>to this. That's kind of a narrow vertical UM, and

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<v Speaker 1>you know, what are your expectations that. So we thought

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<v Speaker 1>the same thing that it was a narrow verth vertical.

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<v Speaker 1>It's not a narrow vertical. It's really a broad vertical

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<v Speaker 1>because everything we do and digital transformation and communications, IoT

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<v Speaker 1>intelligence and so and so, it's abroad this broad applicability.

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<v Speaker 1>But it's a very focused fun so UM. Some of

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<v Speaker 1>the things that investors are telling us is they like

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<v Speaker 1>the fact that we can create alpha. We usually identify

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<v Speaker 1>the early innovators. Companies are trying to use new ways

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<v Speaker 1>of addressing problems. For instance, we just made it. We

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<v Speaker 1>just announced and an investment in a company called Sizsive,

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<v Speaker 1>which was in a spin out of trend Micro, where

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<v Speaker 1>they're trying to deliver a security operations center in the

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<v Speaker 1>cloud because people are trying to manage Amazon, uh, Microsoft

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<v Speaker 1>and all the different clouds providers. They are providing that

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<v Speaker 1>so that they don't have to deal with all the

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<v Speaker 1>people in all the expenses to be able to deal

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<v Speaker 1>with that. So we are addressing some of the core

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<v Speaker 1>issues that the industry is trying to deal with and

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<v Speaker 1>more importantly, we're trying to create alpha. What happens is

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<v Speaker 1>there's two dynamics in the market. Private investors are interesting

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<v Speaker 1>because most of the exits in the in in in

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<v Speaker 1>cyber security are acquisitions. More than ninety percent of companies

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<v Speaker 1>get acquired, and all for get acquired by established companies.

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<v Speaker 1>They're not growing as fast and no longer innovating, but

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<v Speaker 1>they go and buy a fast growing We court technology

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<v Speaker 1>in deeperd fertises to be able to increase the radio growth.

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<v Speaker 1>So define we create alpha. But at the same time

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<v Speaker 1>we have an opportunity we always invest with basically the

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<v Speaker 1>opportunity to take the company public, but more often than

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<v Speaker 1>not they get acquired that they get approached before going

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<v Speaker 1>to that they're public offering. All right, we're gonna leave

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<v Speaker 1>it there. Alberta Jepez he is the co founder and

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<v Speaker 1>managing director of forged Point Capital. They've got a new fund,

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<v Speaker 1>their seconds UH. It is the largest of its kind.

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<v Speaker 1>The new pool of money about seven fifty million under

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<v Speaker 1>management in total. Really interesting. Well in AI and a cybersecurity,

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<v Speaker 1>there's a lot of themes that they're looking at to

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<v Speaker 1>make their potential investments.