Investment - July 2021

The Janvest General Partnership is pleased to announce the execution of Limited Partnership IV’s fifth investment in an Israeli founded emerging technology company. Below you will find information about the business and corresponding investment. We welcome your questions and feedback.

DEAL SUMMARY
Company Name / Arnica
Website / Under Construction
Offices / Atlanta (HQ) and Boston
Sectors / Cyber Security
Founders / 3
Year Founded / 2021
Number of Board Positions Held by Janvest / One
Total Janvest LP IV Investment / $2,000,000
Total Size of Round / $5,000,000
Notable Co-Investors / First Rays Ventures (SF) and numerous prominent Israeli Angel investors and serial entrepreneurs
LP IV Ownership / ~12.0%

TECHNOLOGY DESCRIPTION
This past December, Texas-based SolarWinds (NYSE: SWI) was breached by Russian hackers who planted malicious code in its IT Management tool Orion, which was being utilized by as many as 18,000 networks around the world, including at least nine U.S. federal agencies including NASA, the State Department, the Department of Defense, and the Department of Justice. According to a 2021 Cybersecurity Impact Report from IronNet, the average impact of the SolarWinds breach was around $12 million per company. The hacking technique used in the SolarWinds breach is known as a Supply Chain Attack, which involves hackers injecting malicious code or a malicious component into a vendor’s software, which is then pushed out to its clients and customers creating new pathways into those respective organizations from which data can be accessed and stolen. One of the ways that organizations are trying to combat Supply Chain Attacks is through a hardening of their software production environment. This is known as Development, Security, and Operations (DevSecOps). One of the biggest challenges in DevSecOps, which Arnica is attempting to solve, is the monitoring, granting, and revoking of permissions that certain software developers have to their organization’s Development Operations (DevOps) ecosystem, which is where software production takes place. Excessive developer permissions are a main cause of source code leakage and the creation of digital backdoors (where hackers can enter). Most organizations today do not have the bandwidth to regularly monitor developer permissions while also trying to keep production velocity high and costs low. The inefficiency of today’s developer access management is one of the root causes of Supply Chain Attacks. In response, Arnica is introducing the first Development Access Security Broker (DASB) designed to automatically and autonomously observe a company’s DevOps ecosystem, engage in permission analysis, and either grant or revoke those permissions based on specific needs and corresponding behavior. Arnica’s real-time audit of developer access and engagement can also spot anomalous behavior indicative of a malicious actor trying to inject a harmful payload into a company’s software as part of a Supply Chain Attack.

MARKET APPLICATIONS
The DevSecOps market is expected to grow from $2 billion in 2019 to $17 billion by 2027 as more enterprises invest in solutions to secure their supply chain, but also ensure that their own DevOps ecosystem can maintain high velocity output at the lowest possible cost. At present there are no direct competitors nor tech-enabled alternatives to Arnica’s Developer Access Security Broker platform, which is applicable to any enterprise engaged in either software production or consumption.

MARKET ADOPTION
Arnica is in an initial phase of product development and as such has lined up a number of corporate design partners with whom they can co-develop their DASB solution.

TEAM

 JANVEST VALUE-ADD
Months prior to the Arnica team leaving their respective corporate roles, they began consulting with Janvest on their seed financing strategy as they were all first-time entrepreneurs and wanted feedback from a fund they knew and trusted. Janvest was the first fund they reached out to for guidance, at which time they communicated their desire to raise what we saw as an oversized round that would add some unnecessary risk to their business. Over a multi-week period of time, we worked with the Arnica team on right-sizing their round from an excessive $7M to a more appropriate $5M financing, which we would end up co-leading via Janvest IV. An added component to this pre-round advisory was also convincing the initial two co-founders, who were CEO and COO of the business, to bring on a CTO co-founder to ensure that the core of the company’s intellectual property was being developed or overseen by an equity-holding founding member of the team. This resulted in the Arnica team bringing on that third and much needed technical co-founder. In addition to providing this pre-round advisory, Janvest also helped syndicate the remainder of the round bringing in multiple interested parties including First Rays Ventures out in San Francisco, which Arnica chose to co-lead the round with Janvest. Janvest Partner Brian Rosenzweig will represent the fund on Arnica’s Board of Directors.

JANVEST CONTACT INFORMATION
Brian Rosenzweig
Atlanta, GA
Brian@Janvest.com

Dafna Winocur Biran
Tel Aviv, Israel
Dafna@Janvest.com

Daniel Frankenstein
New York City, NY
Daniel@Janvest.com