What do you do after a blockbuster IPO?
For cloud security provider Crowdstrike the answer involves launching a venture capital firm.
Crowdstrike is partnering with Silicon Valley VC firm Accel to launch a new, wholly independent venture fund for security startups, the organizations announced Monday.
Dubbed Falcon Fund, the $20 million fund will back security startups in seed and Series A funding rounds that could benefit from CrowdStrike’s existing cloud architecture and massive dataset.
“We think of the fund as encouraging young and upcoming startups to leverage the architecture we’ve already built,” CrowdStrike CEO George Kurtz told Business Insider in an interview. “We’ve got the beachfront real estate, and it’s hard for young companies to get that functionality.”
Falcon Fund will operate completely independently of CrowdStrike and Accel, a leading early-stage venture firm in Silicon Valley that invested in CrowdStrike’s Series B round of funding. Kurtz and Accel partner Sameer Gandhi will lead the fund as managing partners along with a small operations team, Kurtz and Gandhi told Business Insider. Given the fund’s size and competition among early-stage firms, Kurtz said Falcon Fund will likely co-invest instead of leading any rounds. That means, theoretically, Falcon Fund could partner with Accel on future investments, Gandhi and Kurtz said.
“We want to find scrappy startup organizations that don’t have the wherewithal to create a scalable cloud architecture,” Kurtz said. “Our goal is to really throw gasoline on the fire to get them to market.”
Crowdstrike, which made its market debut in June,has surged about 160% above its IPO price.
Like any venture fund, not every startup will be a fit for Falcon Fund. Kurtz said that startups will have to work with CrowdStrike’s Falcon, its primary service for cloud-based endpoint security software. The upside, according to Kurtz and Gandhi, is that entrepreneurs get access to CrowdStrike’s significant customer base through the third-party application management tool CrowdStrike Store, which launched in February and is essentially an app store for CrowdStrike customers.
“Think of it like Amazon,” Kurtz said. “People are able to build on the building blocks to create their applications. A big driver of the fund is to encourage smaller companies to be a part of our open ecosystem which allows more modules for our customers without creating too much work for them.”
Although Accel is one of the leading investors in the security industry, part of the appeal of partnering with CrowdStrike for the fund was the company’s deep understanding of the cloud security ecosystem, Gandhi told Business Insider. Between industry expertise and its customer base, Gandhi said Falcon Fund has an entirely different value proposition for entrepreneurs looking for funding.
“There are a lot of places to get seed and Series A capital,” Gandhi said. “When you get down to it, the discerning entrepreneur wants to get money from the best long-term partners. Now, we’re enabling some entrepreneurs and companies to stand out and become differentiated because they have access to things that are expensive and difficult to build on their own.”