RSA Conference to invest $5 million in sandbox contest finalists

The owner of the RSA Conference announced it’s investing $50 million in finalists for the Innovation Sandbox (ISB) contest, which has helped dozens of cybersecurity companies get off the ground. 

The top ten entries will receive a $5 million uncapped Simple Agreement for Future Equity (SAFE) investment provided by affiliates of Crosspoint Capital Partners — the company that owns the conference. The investment is being made to honor the 20th anniversary of the competition.

SAFE investments provide startups with immediate capital without constraining their valuation, which can change based on future fundraising efforts. 

Hugh Thompson, executive chairman at RSA Conference, told Recorded Future News that past finalists in the competition told them that the exposure they received helped them attract customers. Past finalists include companies like Wiz, Imperva, SentinelOne, Axonius, Talon Cyber Security, Phantom Cyber and Hidden Layer.

“We’ve also observed that in recent times investment rounds are much bigger and require multiple investors to participate in these rounds. We believe that our form of funding in a SAFE coupled with Crosspoint’s operator heritage fits smoothly alongside existing and future investments from traditional VCs,” he said.  

“Feedback from past ISB finalists and the venture community has been that this new investment program is a game-changer and makes the prospect of competing as a top 10 finalist even more compelling. Finalists are direct beneficiaries as are the broader cybersecurity community around RSA Conference given that a portion of the returns received from these investments will be used by RSAC to support the cybersecurity community.”

The announcement, made on Thursday, has garnered some backlash from those who interpreted the news as an effort by Crosspoint Capital Partners to forcibly buy portions ofcompanies that participate in the contest. 

Thompson defended the effort by reiterating that the valuation of startups is not made until the companies take their next round of professional financing after the competition. 

“The feedback that we’ve received is that this form of investment fits smoothly alongside existing and future investments from traditional VCs. We’ve tested this view with other VCs as well as prior finalists in Innovation Sandbox,” Thompson said.

The competition typically gets more than 150 applicants each year and companies that make the top 10 have collectively raised over $16.4 billion in investments over the last 20 years.  

A panel of judges chooses the top 10 finalists each year after looking through applications. At the conference, which takes place in San Francisco every spring, finalists present their business and products before a winner is chosen. 

“When Wiz participated in the RSAC Innovation Sandbox contest in 2021, we were a young company in an emerging cybersecurity category,” said Anthony Belfiore, chief security and strategy officer of Wiz. “The exposure that we received from the ISB platform and RSA Conference helped us attract more customers earlier in our journey. This was extremely helpful for us. This new investment program is a game-changer.”

Verizon CISO Nasrin Rezai, who serves as a sandbox judge, said senior cybersecurity officials are “constantly trying to sort through the barrage of new cybersecurity entrants” and are always looking for a signal on who to spend time with and which solutions to try.

“The rigorous process of picking these top 10 finalists creates a signal to the market of who to pay attention to,” Rezai said. 

The conference also announced a new “Founders Circle” program that will provide past top 10 finalists with further coaching, exposure and mentorship.