The program included remarks from the venture group’s leadership, Don Garman and Greg Hitchan, and then presentations from four of the companies that the local fund has invested in. They also loved to show the chart of venture firms headquarters with San Francisco and the Peninsula filled with logos, but only Tri-Valley based here in the East Bay. That explains their strategy of being early stage investors in local firms that they have helped grow with capital and their networks.
Their first fund, raised in 2017, invested in 15 companies in three areas: life sciences, deep tech and cloud software/IT. The second fund, raised in 2021, is about 50% invested in 11 companies (some second round) as they continue to screen and evaluate more opportunities than they can handle. Given the effects of the pandemics they’ve also loosened their former requirement that companies be headquartered in the Tri-Valley to having a substantial nexus here.
The presenting companies demonstrated that. Jack Kudale, CEO of Cowbell Cyber, said he’d moved from Long Island to Pleasanton, his kids were in local public schools and he had a 10-minute commute to the office. His company insures small and medium-sized businesses against cyber ransom attacks—there are about 33 million companies in the United States. One slide showed 2,000 cyber attacks across the country and he said the average ransom was $2 million to say nothing of the downtime for the company. The challenge is with traditional insurance you can evaluate risk and exposure—that’s much more difficult in the cyber space.
They’ve partnered with major re-insurers such as Lloyd’s of London to build their capacity as well as developing their own reinsurance company that will allow them to broaden their market to larger companies when they launch their next product. The growth is expected to go from $340 million this year to insuring 100,000 customers in 2025.
After Kudale’s remarks, Garman said that he’d called him because a friend, who owned a $50 million business, had been taken down by cyber attack with a seven-figure ransom demand and did not have cyber insurance based upon a recommendation from his broker (presumably former broker). Kudale dropped what he was doing to help and put his best people on the problem.
Inspired Flight, a drone company, was drawn into the ventures portfolio by one of its limited partners, Kevin Comerford, CEO of Service Champions. Like Hitchan, Rick Stollmeyer, is a graduate of the U.S. Naval Academy, and served on a nuclear submarine and then worked in the commercial nuclear power industry before moving to Vandenberg Air Force base and the space program. While there, he founded a cloud software company that he eventually sold to partners. His son founded the drone company and then invited Stollmeyer in as CEO to scale it.
Inspired Flight is focused on a tight market of government, surveying and mapping and inspection for utilities. The Chinese have dominated the drone market, but Congress passed the Defense Authorization Act in 2021 that mandated no Chinese products on government facilities. Utilities, states and other organizations are following suit.
The largest Inspired drone is designed to enable utilities to inspect its transmission towers and other facilities without having workers climb the towers. It’s remarkably more efficient and safer and organizations in each of its target areas will require many drones.
They’re backing that up with software so they can track the performance of both the drone and its operator to provide maintenance and efficiency support to the owners.
Inspired is working to do for drones and inspections/mapping what Monarch Tractors, with is fully electric and self-controlled vehicles is doing for agriculture.
Check upcoming posts for more on the other firms.
