Identity as the New Cybersecurity Perimeter: An Investor's Perspective

Cameron D’Ambrosi [00:00:03] Welcome everyone to State of Identity. I am your host, Cameron Ambrosi. Joining me this week is Marcus Bartram, general partner at Telstra Ventures. Markus, welcome to the podcast.

Marcus Bartram [00:00:15] Hi, Cameron. Lovely to be here and great to chat with you today.

Cameron D’Ambrosi [00:00:19] Thank you for joining us. We are excited to have you. Your track record in the identity space speaks for itself. We at State of Identity always appreciate the opportunity to have investors join us because it shows that they are putting their money where their mouth is. Before we dive in, could you share a brief overview of your background and how you came into the digital identity space?

Marcus Bartram [00:01:13] Sure, happy to. I have a nontraditional journey into venture capital. I am an engineer by background and have worked as an engineer for several companies. I found myself building businesses inside these companies, and when I joined Telstra in early 2004, I was part of the SMB group, where we were trying to drive innovation in that market. We came up with the idea of how to attract entrepreneurs to our ideas and bring them to market without the heavy process and overhead of a telecoms company. Out of that idea was born Telstra Ventures, where we invest in companies that generate net new revenue for Telstra. We invested off Telstra’s balance sheet until 2018 and then split out into an independent fund with Telstra as an LP and a series of financial investors who supported us. We invested in companies that solve problems in the identity space because identity is at the core of so many different products, and it’s the core of a user or customer’s experience. We invested in Auth0, which delivered a much better, more secure, and more consistent user experience from an enterprise to its customers. We also invested in Cloud Knox, which focused on the problem that customers have as they deploy public cloud infrastructure. Strata Identity is another company we invested in, which is building an identity fabric that integrates into all the different elements of an organization’s identity infrastructure.

Cameron D’Ambrosi [00:07:44] Thank you for sharing that. Could you talk about how you see the intersectionality of your investment theses with those of your corporate sponsor, Telstra?

Marcus Bartram [00:08:40] Telstra wanted us to invest in companies that would help them generate net new revenue, but we knew that the investment needed to be financially viable and successful. We used standard venture capital processes and thinking to decide if an investment would generate a capital return and if the company could survive despite Telstra. As we migrated out of Telstra and had them as a funding partner rather than a strategic partner, we didn’t change anything because we built the venture processes and decision making while we were on the balance sheet. The final decision was now in the hands of the partners, and we put our own capital into the fund to align our interests with that of Telstra. We broadened the aperture on that strategic conversation and created a revenue team that generates net new revenue for our portfolio companies.

Cameron D’Ambrosi [00:15:31] It seems that identity is the new perimeter in cybersecurity. How do you see this shift towards an identity-centric cybersecurity world impacting your portfolio currently and how you’re thinking about deploying new capital in the space?

Marcus Bartram [00:22:03] I agree that identity is the entry point into an organization and the complexity of the identity market is getting bigger. There are many investable tailwinds in this market, and there are interesting ideas around identifying problems across multiple channels, not just email but across various collaboration platforms. Complexity drives cyber problems, which drives risk.

Cameron D’Ambrosi [00:27:00] With the pandemic accelerating digital transformation across industries, how do you see digital identity evolving in the next few years?

Marcus Bartram [00:27:10] The pandemic has accelerated the adoption of digital solutions, and digital identity is no exception. We are moving towards a world where we have multiple identities, and the management of those identities is becoming increasingly important. The identity market is becoming more crowded, and there is a lot of innovation happening in the space, which is both exciting and challenging. There is a lot of opportunity for startups to innovate and for investors to invest in solutions that solve real problems. In the next few years, we will see more consolidation in the identity space as larger players acquire smaller players to build out their identity offerings. We will also see the emergence of more decentralized identity solutions, which will give users more control over their identities.

Cameron D’Ambrosi [00:31:06] Thank you, Marcus, for joining us today and sharing your insights on the digital identity space.

Marcus Bartram [00:31:11] Thank you, Cameron, for having me. It’s been great to chat with you.

Cameron D’Ambrosi [00:31:12] Thanks for tuning in at Liminal. We’re dedicated to helping executives accelerate their critical decisions with actionable market intelligence. Our Link platform offers specialized digital identity, market, data curated signals, macro themes and industry reports to help businesses make critical decisions with confidence, serving digital identity, fintech and cybersecurity solution providers, as well as private equity and venture capital firms. We empower executives to generate ideas, build solutions and invest with unfair advantage over their competitors. Learn more at Liminal dot C O.