Our firm has been quite active in the homeland defense marketplace over the years and in fact we have three portfolio companies developing important products and solutions which have direct relevance to today’s physical security challenges: Reveal Imaging (bomb detection), VidSys (video security infrastructure software), and T2 Biosystems (rapid, non-invasive pathogen detection platform).
This investment thesis was born out of a post-9/11 belief that the US government was on a program to massively, in parallel, subsidize technologies which had homeland defense applicability through the awarding of thousands of development grants. The core of our thesis was that in addition to addressing important military threats, many of these technologies could be pointed at other commercial and/or industrial applications. For instance, T2 Biosystems (I am on the board of that company) has profoundly important medical applications in the rapid detection of important biomarkers. VidSys (where I am also on the board) has interesting traffic management and situation analysis capabilities, and in fact some of VidSys’s most significant customers are leading US corporations.
There is a real phenomenon in the marketplace where many customers are looking to integrate the IT security infrastructure with the physical security management systems. In so doing Chief Security Officers are able to generate an integrated view of vulnerabilities across the entire enterprise. Historically these systems have been segregated and managed independently.
This thesis is not without issues though. We are very mindful of the customer concentration concerns and that sales cycles are at times frustratingly long (that may not be unique to homeland defense related companies).
Check out today’s Boston Globe which had a nice piece on this theme and provides more color on some of our portfolio companies.
Do you agree with how attractive we believe this investment thesis to be?