Investors eye security firms with green crossover

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Monday, October 1, 2007

SAN DIEGO--Airsis, a company offering web-based services that allow subscribers to monitor air quality and ship locations, recently closed a $1 million round of funding with angel investors, and currently has "two name-brand venture capital funds that are looking at a significant investment," said president Dean Rosenberg. As a firm that plays in a number of markets--business efficiency, security, environmental protection--it is indicative of a growing trend where investors are looking for opportunities to fund companies that "see the whole picture," said Rosenberg, and understand the varying ways that security firms can operate outside of their traditional roles.
In the case of Airsis, one of its divisions, PortVision, was designed to allow subscribers to monitor the comings and goings of ships by tracking their movements via a web portal. Ports and those who serve the ports could know exactly where every ship is at any time and allocate resources accordingly, rather than have fueling operators, for example, sitting around waiting for a ship to arrive. However, the company quickly discovered "the Coast Guard are using it for maritime domain awareness," said Rosenberg, "to adequately assess threats and protect the homeland. And now we are starting to be used for investigation and mitigation of spill events."
So Airsis was able to show an opportunity to win business on a number of fronts, and that attracted investor interest.
This comes as no surprise to Douglas Lloyd, director and founder of Venture Business Research Limited, a security finance research firm based in London. "When we started tracking security, we were already tracking clean energy," he said. "And when we started, there was no crossover ... Now there's increasing crossover because investors are calling the clean tech companies 'security' companies." He noted a venture fund like Paladin Capital, which was part of SafeView's sale to L-3 Communications in 2006, "is saying, 'If we grow more crops for biofuels, that gives us greater security,' and that way they can call it a security company and use it as part of its investment portfolio."
William Lynch, vice president at ProFinance Associates, which arranges financing in the security industry, said he is seeing similar activity. "Clearly, the green movement is about protecting the environment," he said, "and, to that extent, security is about making sure we have an environment ... I think the clean technology rage is still on, and I think it's got legs for a good while, and I see that there's an interesting play there."
"I think the sensor technologies in the security space are enormously interesting in the clean tech realm," he said, "especially with the monitoring centers. I would agree that there's crossover potential, but it's got to be grounded on true returns on investment and not some philanthropic venture."
Everyone interviewed, too, agreed that the security play is the more important piece of the crossover. "I don't think they're investing because the companies are green," Lloyd said. "It's because they're seeing a crossover and thinking, 'We can be environmentally friendly and focused on security, and isn't that sexy.'"