How to Choose the Right Investors With So Much Changing, So Fast in Security

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When Netskope was founded in 2012, my co-founders and I made a bet that the cloud would change everything faster than most businesses anticipated. It was clear that security would be hampered if it wasn’t re-imagined in a cloud-first era that prioritized protecting every organization’s two most valuable assets: its people, and its data.

Fast forward to today and Netskope has been able to grow into a leader in what is now known as Security Service Edge, or the set of security service services required to enable every enterprise’s successful journey towards the cloud . This environment allows team members to work and access data from almost anywhere.

I am often asked how I selected the investors we chose to partner with, especially at a time (a decade ago) when at least eight out of 10 security leaders told us our vision for securing users and data in the cloud and the broader internet was a little crazy. Netskope’s success and growth has been dependent on choosing the right investors at the right time.

But as a first-generation Canadian who grew up in Toronto and began working in IT at the age of 16 to pay for university, knowledge of the investment community didn’t come naturally from my upbringing or the environment I grew up in. I was lucky to have worked for small, scrappy companies, large companies with huge global workforces, and all of these experiences helped me understand the requirements for growth of a company at different points in my career. These are some lessons that I have learned along the journey that have helped me when selecting investors:

Nurture good relationships and keep them happy

Although it may seem obvious, building trust and commitment is key to building the right relationships. This trust can only be established by maintaining open communication with investors over many years. Prior to arriving in Silicon Valley, I started at Microsoft in the early ’90s and worked on the first version of Microsoft Office.

I was fortunate to have the opportunity to work with some of the most respected executives in security and tech as I progressed in my career. Then, I decided to start my own company. While in a Starbucks, I first sketched the idea for Netskope’s platform on a napkin. Enrique Salem was then the CEO of Symantec. John Thompson is now the chairman at Microsoft. Both men were supportive of my vision and invested in the company because of our longstanding relationship.

Related: 5 Things to Keep in Mind While Selecting Your Investor

Align on values and cultural fit, then valuation — not the opposite

I have never chosen the highest valuation in any round of Netskope. Because I believe in aligning on culture and value first. You have the right as an entrepreneur to choose investors and firms that believe in you and your vision. It is important to remember that capital is not always available. This is especially true in today’s fundraising environment where VC dollars are flowing more freely that ever before.

It is easy to believe that investors have all the power and that you should follow their lead. But I think it is imperative to choose an entrepreneur-friendly investor. This means you want to choose investors that are both constructive and focused upon company-building. Consider their expertise in the field. If the VC has previously invested in consumer mobile apps, cybersecurity will likely be a big deal for them. It can be counterproductive to the process to spend time explaining to potential investors the basics of your market. This could be a sign that they are not the right partner.

Beyond this, being able to assess a potential investor’s cultural fit and belief in your vision can help avoid tension and conflict down the line. You want investors who believe in what you are building. You want to build a relationship with them. You should not only be able to see them in the boardroom. You should be able engage with them in other settings. You should be able and willing to have a conversation with them. I value collaborative, open, transparent investors who frankly are “good people” above all else — that, in and of itself, is a big filter.

Related: Choosing Your Investors Wisely

Raise your company’s value by looking inside

I believe culture is one of the key attributes of a high-growth company. Netskope encourages people to think strategically and creatively, and we strive to foster an entrepreneurial spirit. Our product vision aligns with a rapidly growing market category. However, our momentum is a testament the talent of our people and teams. This culture allows us innovate faster and more quickly than other security companies. Netskope’s latest funding round was significantly oversubscribed due to strong investor conviction that we have the right mix of market opportunity, differentiated vision and outstanding execution by our team.

No matter where your company is at, investors are looking for integrity. This includes a commitment to your vision, a focus on value, and a respect for company culture. I have always said that if you could ask for one thing when you build a company, it should be that your destiny is controlled by your own execution — not outside market or industry factors, not your board or capital markets, not competitors. I have learned that the best investors are crucial to the success of my business.

Related: The Importance of Recognizing the Right Investor

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