Venture Capitalist: 'I'm Still Bullish'Trident's YÃ©pez on What Market Volatility Means for Information Security Companies
By the time venture capitalist Alberto YÃ©pez had breakfast in California on Monday, global markets had plunged, and the Dow had lost over 1,000 points and gained back nearly 900. His message to cybersecurity investors about the volatile market: "I'm still bullish."
It's been a wild ride for investors. At the close of trading on Aug. 24, the STOXX Europe 600 was down more than 5 percent, the Shanghai Composite dropped 8.5 percent, and stocks in India suffered their biggest fall in seven years. In the U.S., the Dow Jones industrial average plummeted by as much as 1,089 points, then gained back roughly 900 points - the biggest intraday swing in history. The Dow ended trading down 588 points (see: Volatile Stock Market: Cybersecurity Fallout?)
What's the potential impact of this volatility on the hot cybersecurity sector and firms such as Symantec, Cisco and Zscaler - all of which have made recent high-profile moves? (See Security Sector Business Roundup) Not much, says YÃ©pez, managing partner at Trident Capital Cybsersecurity, which counts security firms Qualys, Alien Vault and Prolexic among its current investments.
"Investments in cybersecurity will not go down," YÃ©pez says. "I'm very bullish about the market - the security market specifically."
The volume and sophistication of cyber threats against organizations will continue to escalate, YÃ©pez says. And many companies and sectors have historically underspent on cybersecurity - that will have to change to counter the threats.
"Investments in cybersecurity will not go down," YÃ©pez says. Individual valuations may decline, and M&A activity is likely to rise, but so will the market's focus on strong business and security fundamentals. "Companies addressing key markets with strong fundamentals and experienced management - that's the key - will do very well."
In an interview about the latest market swings, YÃ©pez discusses:
- How to keep the latest volatility in historical perspective;
- Economic signs to look for in the coming weeks;
- The state of the cybersecurity market as we look toward 2016.
YÃ©pez joined Trident Capital Cybersecurity in 2008. Previously, he was an entrepreneur with a successful track record in building global businesses. He was founder, chairman and CEO of enCommerce, co-CEO and president of Entrust and chairman and CEO of Thor Technologies. He also held senior management positions at Oracle and Apple. In addition, YÃ©pez worked as an "entrepreneur in residence" at Warburg Pincus, served as executive chairman of a Bain Capital portfolio company and was a consultant to the U.S. Department of Defense as part of the DeVenCI Initiative.