Venture investors often demand proof of concept in the marketplace before they’ll pour precious capital into a technology start-up.
If you’ve helped grow successful companies in the past, however, it turns out all you really need is your resume and a few co-founders.
That’s what happened when a little-known company called Expel, Inc. popped up in Herndon earlier summer. Despite having no customers, no office and only a few employees, the company has already attracted $7.5 million from well-known local technology funds Paladin Capital Group and New Enterprise Associates.
Expel’s secret sauce seems to be its leadership team, three executives who played important roles in one of the region’s biggest technology success stories.
Chief executive Dave Merkel is a former Air Force cybersecurity guru who went on to climb the ranks at AOL in the company’s heyday. He later made his name as chief technologist at Mandiant, which emerged from Northern Virginia to become one of the dominant players in the murky world of corporate cyber-defense, employing complex technology to investigate potential hacks.
Mandiant hit a home run in 2013 by suggesting the Chinese government was sponsoring the cyber-espionage many had long suspected, publishing a report linking the People’s Liberation Army to a notorious hacker group known as APT1 (short for Advanced Persistent Threat). The company cashed in a year later when it sold for almost $1 billion to FireEye, another major player in corporate cyber-defense.
Merkel has been tight-lipped about what exactly Expel is going to do, except that it will sell cybersecurity services to the private sector. He implied that it won’t just be a Mandiant re-boot but declined to elaborate.
“Whenever you build a company you have an opportunity to make a whole bunch of mistakes,” Merkel said. “This time we’re hoping we’ll get a chance to make new and different mistakes.”
Harry Weller, a partner at New Enterprise Associates, suggested the firm will do more than just spot hacks.
“That team is extraordinarily experienced not just at identifying problems, but at actually fixing them,” Weller said of Expel’s co-founders.
Betting on more experienced founders is something of a theme for NEA lately, which just upped its bet on a ThreatQuotient, a cyber-threat management start-up headed by a team of executives from Sourcefire the region’s other big cyber-security exit.