By Deborah Gage
After years of serving as a punching bag for startups claiming
that innovation at one of Silicon Valley's most prominent
cybersecurity companies has stopped, Symantec Corp. is taking on
its critics.
The cybersecurity company has launched a partnership with a data
analytics incubator, Frost Data Capital, to create and seed
cybersecurity startups as a way to solve some of the biggest
security challenges for Symantec's customers, according to Senior
Vice President Jeff Scheel. These customers run refineries,
pipeline operations or hospitals that may be targeted for attacks,
and may run critical infrastructure or deal with highly sensitive
personal data.
"Their compliance and regulatory risks are huge," Mr. Scheel
said.
Symantec and Frost plan to incubate as many as 10 startups a
year. The companies will be focused on cybersecurity analytics and
the Internet of Things--including all those endpoints--to try to
prevent next-generation attacks on corporate infrastructure, the
companies said.
Despite the $1.77 billion that U.S. investors poured into
cybersecurity last year, according to Dow Jones VentureSource,
startups that have raised venture capital can't always help
Symantec's customers because VCs are going after billion-dollar
ideas, and infrastructure "has not been an area of focus for
traditional venture funding," Mr. Scheel said.
Symantec has tried investing in startups through a corporate
venture fund but had "very mixed results," he said. "We weren't
involved in the initial direction of companies, and [they were]
evolving in a way that, even though we had board observation
rights, was independent of us."
These investments also are part of Symantec's plan to split off
its Veritas storage business, which Symantec bought in 2005 for
about $13.5 billion, and focus solely on cybersecurity as a way to
rejuvenate the more than 30-year-old company.
Mr. Scheel, who joined Symantec in November from the
cybersecurity company FireEye Inc., said he is one of 11 top
managers who joined in the past year to reinvigorate the company.
Symantec was a cybersecurity pioneer, but has lately been seen as
falling behind in the race to combat increasingly sophisticated
cybercrime.
Symantec has other cybersecurity plans, too. It will open its
telemetry and intelligence cloud, which collects information on
hundreds of millions of endpoints--the devices connected to a
network--and has been used and has been used to power Symantec's
own products to third parties so they can mine it, he said.
"What we envision going forward is an open innovation model for
Symantec, " Mr. Scheel said.
Frost Data Capital, meanwhile, closed a second fund, Frost VP
Early Stage Fund II LP, this year of about $41 million and looks
solely to large corporate partners for its deals. The firm struck a
partnership with GE last year around industrial technologies and is
incubating about 24 companies so far. It builds startups based on
ideas that are vetted with its corporate partners.
"Nobody is building ice cream cones or sneakers or bottle
rockets," said Frost President and Managing Partner John
Vigouroux.
Symantec will be investing off its balance sheet, Mr. Scheel
said, but hasn't said how much money it is committing to this
effort. The split between Symantec and Veritas is due to be
completed on Jan. 2, 2016.
Write to Deborah Gage at Deborah.Gage@dowjones.com
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