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Cybersecurity has had a rough go of it lately, with investment<\/a> in the sector dropping a precipitous 40% compared to the year prior. But there are promising early, even preliminary, signs of a recovery.<\/p>\n The vast majority of chief information security officers reported higher budgets for 2024<\/a>, according to the cybersecurity-focused VC firm NightDragon. And, despite lower overall investment in the cybersecurity industry in Q1 2024, the number of deals increased compared to Q1 2023, per recruitment outfit Pinpoint.<\/p>\n It\u2019s against this backdrop that Evolution Equity Partners<\/a>, a growth capital investment firm based in NYC, on Tuesday launched a $1.1 billion cybersecurity and AI fund, the third such fund in Evolution\u2019s history.<\/p>\n The fund, called Evolution Technology Fund III, was oversubscribed, with participation from existing and new endowments, sovereign investors, insurance companies, foundations, fund of funds, family offices and angels. It\u2019ll pursue investments ranging from $20 million to $150 million in cybersecurity firms and startups leveraging machine learning and AI to build \u201cmarket-leading\u201d platforms, Richard Seewald, managing partner at Evolution and one of the firm\u2019s founders, told TechCrunch.<\/p>\n \u201cThe Evolution Technology Fund III has already backed fifteen leading cybersecurity companies, initiating its investment period over 12 months ago,\u201d Seewald said. \u201cWe expect to invest in a portfolio of up to thirty companies in the present fund. We\u2019ll work with management teams and founders, providing them with support and insight in areas including sales and marketing, product technology, human capital, M&A and business development, really enabling them to excel.\u201d<\/p>\n With Evolution Technology Fund III, Evolution\u2019s strategy will be to reserve\u00a0 around 75% of the $1.1 billion total for early-growth-stage companies, around 15% for later-growth-stage startups and around 10% for earlier-stage VC tranches, with investments to be made not only in North America but in Europe and Israel, a hotspot for security tech.<\/p>\n \u201cOur strategy is to invest that fund in a diversified portfolio across the different stages of maturity,\u201d Seewald said. \u201cWe believe that provides private markets investors with diversified exposure to cybersecurity opportunities.\u201d<\/p>\n ESG will be another factor, according to Seewald.<\/p>\n \u201cEvolution is committed to integrating material environmental, social and governance (ESG) criteria in its investment processes and ownership practices,\u201d he said. \u201cWe actively engage with our portfolio companies creating diverse boards and leadership teams bringing varied perspectives to decision-making processes, reducing the risk of groupthink and enhancing accountability.\u201d<\/p>\n We\u2019ll hold them to it.<\/p>\n Evolution, which has offices in Palo Alto, London and Zurich in addition to New York, was founded in 2008 by Seewald and Dennis Smith, who met while working together at the cybersecurity giant AVG (now owned by Avast). J.R. Smith and Karel Obluk \u2014 the former CEO and chief scientist at AVG, respectively \u2014 joined Seewald and Smith to start Evolution after AVG went public.<\/p>\n Evolution\u2019s 30-person teams manages around $2 billion in assets and has backed 60 companies to date; its previous fund<\/a> was $400 million. Among some of the firm\u2019s more successful bets are Arctic Wolf (which is planning for an IPO), Talon Cyber (which is reportedly in negotiations with Palo Alto Networks for an M&A deal), Snyk, Aqua Security, SecurityScorecard and Carbon Black.<\/p>\n<\/p><\/div>\n