By Liran Grinberg, Managing Partner, Team8 Capital
We’re excited to work with WisdomTree on the WisdomTree & Team8 Cybersecurity Index (WTCBR) — a first of its kind Index that is geared towards tracking innovations in cybersecurity made by companies in the public markets. We are delighted to partner on this initiative with WisdomTree, a leading asset manager and sponsor of ETF (exchange-traded fund) products, which this week simultaneously launched the WisdomTree Cybersecurity Fund (WCBR) on Nasdaq, the London Stock Exchange, Deutsche Börse Xetra, and Borsa Italiana.
In 2020, the pace of digital transformation dramatically accelerated to adapt to the pandemic, and trust in our digital infrastructure went from very important to absolutely critical. At Team8, we believe that this is the perfect time to offer the market a fresh approach to track, measure and assess innovation in the broader cybersecurity public market.
Our journey to launching an index
Prior to co-founding Team8 in 2014, I led the flagship product at unicorn fintech company eToro, an investment platform whose vision is to open the global markets for everyone to trade and invest in a simple and transparent way. I was reporting into Ronen Assia, co-founder of eToro, who recently joined Team8 to launch our fintech foundry. He introduced us to WisdomTree and this idea, and we quickly realized there’s no cyber index focusing on pure cyber innovation. Inspired also by The BVP Nasdaq Emerging Cloud Index that was launched by our LP investor Bessemer Venture Partners, this endeavor merges a number of unique ingredients together: Team8’s cyber and fintech expertise alongside a mission of introducing a simple and transparent way to follow cyber innovation and growth themes in the public market.
Measuring innovation in cybersecurity requires a fresh approach
Current alternative methods weight or construct companies based on market capitalization or reported revenue streams, which we find limited.
Our cyber index, WTCBR, is a novel instrument to track the implications of developments in technology, threat, geo-political, regulatory and business landscapes on the broader cybersecurity market. Our proprietary methodology systematically surfaces cyber innovations we believe will have the greatest impact, and measures the exposure of public cybersecurity companies, and their products and services, to these key development areas.
A growing attack surface, rising stakes and greater ease with which to carry out a cyber attack will continue to drive cybersecurity and related matters to the forefront of boardroom discussions, policy debate and public perception of the overall confidence in our digital infrastructure.
One thing we are highly confident about is that the cyber strategies that worked in the past are ill-equipped to solve for today’s interconnected and rapidly changing world. That means there is a world of opportunity for new companies and innovations to secure our digital future.
Our design principles reflect our world view in that cyber is a global trend and one that is being solved from different perspectives. There isn’t a silver bullet, but rather an amalgamation of concepts, strategies and techniques required to create and sustain digital resilience.
In constructing Team8’s cyber innovation themes for 2021, we brought together three unique perspectives:
1. The Practitioner Perspective — the cybersecurity executives responsible for protecting some of the world’s leading enterprises, who are also the buyers of cybersecurity technology and the force driving demand for the cyber industry. Our operating partner and CISO-in-Residence, Charles Blauner, represents this perspective, having led Citigroup’s cybersecurity globally prior to joining Team8. In addition, we integrate perspectives from the Team8 Village, our unique community of 350+ C-level security executives from 300 enterprises across 20 countries, who share with us their challenges, budget planning and their view of developments in cyber risk.
2. The Attacker Perspective — bringing unique insights into how attackers think and operate and how they would circumvent new security controls. This unique perspective looks at the threat landscape and trends as viewed by our in-house cyber experts, many from Israel’s elite military intelligence unit 8200, augmented by the NSA.
3. The Innovation and Disruption Perspective — as a venture group building and investing in cybersecurity startups, Team8 is constantly on the hunt for opportunities to disrupt the industry with innovative technology. To build our investment thesis, we employ a unique talent pool, which includes experts in technology research, data science, academic research, market research and serial accomplished cybersecurity entrepreneurs. We start investing at an early stage and follow our companies and the broader landscape as these companies grow to later stages and eventually disrupt the public companies, either being acquired by them, remaining independent or going IPO.
The result is the following 7 themes we believe will drive growth in the cyber sector: Smarter Security, Resilience & Recovery; Cloud Security; Perimeterless World; Shift-Left; Privacy & Digital Trust; & Security of Things.
You can read about these ideas in more depth in our 2021 Cybersecurity Brief.
Finally, we mapped different providers and their capabilities to our themes, creating a heat-map highlighting exposure to impact areas.
The future has yet to be written
The index breakdown can be found here. It includes a mix of established players with ambitious innovation programs (e.g. PaloAlto) and newer players, who are growing horizontally after scaling a niche (e.g. Crowdstrike).
We do not believe cyber will be a winner-take-all-market and some of the most important breakthroughs have yet to occur. If our thinking about the future comes to fruition, we will see an expanding definition of cybersecurity, many more cyber IPOs, more innovations, more possible approaches and strategies, and an investment landscape that is more complex.
As we refine and adapt our themes, we are striving to provide the purest view of the true innovations in cybersecurity — shining a spotlight on the themes and products that will make the biggest impact.
This is an opportunity to give a shoutout and special thanks to our amazing partners at WisdomTree. Thank you to Ronen Assia, for introducing us to WisdomTree; to Aaron Dubin, who started working with me on this at the onset, joined later by Ben Borodach, as well as our internal group of experts: Nadav Zafrir, Admiral (Ret.) Michael Rogers, Charles Blauner, Bob Blakley, Amir Zilberstein, Tom Sela and Assaf Mischari.
This blog post represents the opinions of Team8 Labs Inc. (“Team8”) and is for informational purposes only. You should not treat any opinion expressed by Team8 as a specific inducement to make an investment in any security, but only as an expression of Team8’s opinions. Team8’s statements and opinions are subject to change without notice. Team8 is not registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and relies upon the “publishers’ exclusion” from the definition of investment adviser under Section 202(a)(11) of the Advisers Act. As such, the information contained in this blog post does not take into account any particular investment objectives, financial situation or needs and is not intended to be, and should not be construed in any manner whatsoever as, personalized investment advice. The information in this blog is provided for informational and discussion purposes only and is not intended to be, and shall not be regarded or construed as, a recommendation for a transaction or investment or financial, tax, investment or other advice of any kind by Team8. You should determine on your own whether you agree with the information contained in this blog post. Certain of the securities referenced in this blog post may currently, or from time to time, be constituents of an index developed and maintained by WisdomTree Investments, Inc. using data provided by Team8, which has been or will be licensed for a fee to [one or more] investment funds. In addition, certain officers or employees of Team8 or funds or other persons or entities affiliated or associated with Team8 may hold shares of, be officers or directors of, or otherwise be associated with some or all of the issuers of the securities referenced in this blog post or included in such index. Team8 expressly disclaims all liability with respect to any act or omission taken based on, and makes no warranty or representation regarding, any of the information included in this blog post.