18 Oct Why a Silicon Valley venture fund thinks Baltimore can be an East Coast tech hub
For now, Baltimore’s Port Covington doesn’t look like much. Construction is just beginning on a multi-billion-dollar development spearheaded by UnderArmour founder Kevin Plank, who wants to build a bustling waterfront business center that will bring high-paying jobs and world renown to a now-blighted section of South Baltimore.
Central to those plans is a new effort to attract cyber-tech companies to the city as part of a branding initiative dubbing the area “CyberTown USA,” executives involved with the development said in a recent briefing.
“Cybertown will become its own sort of ecosystem within Port Covington, and within the first phase of construction,” said Steven Siegel, a partner at Weller Development, which is overseeing the project.
Siegel says his company has set aside space in Port Covington’s Rye Street Market, a mixed-use property that includes about 180,000 square feet of office space for the project, complete with a private fiber-optic cable system.
Recruiting for the effort is led by Datatribe, a start-up incubator known for building tech start-ups around technology and know-how from the CIA and NSA. On Thursday the incubator announced it will leave its home in Fulton, Md., for Port Covington when construction on the project is complete.
Datatribe has made a name for itself seeding venture-backed security start-ups including like Enveil and Dragos, both of which have drawn heavily on the NSA for engineering talent. Founder Mike Janke, a former Navy special forces operative who founded the encryption company Silent Circle, says he is engaged in negotiations with some 28 cybersecurity-related businesses which are considering moving to Port Covington. He declined to note which ones, saying they are to be announced in tranches as the project nears completion.
Demian Costa, a partner at Sagamore ventures, a technology venture fund fueled by Kevin Plank’s retail fortune, is also helping to recruit cybersecurity companies for the project.
In Maryland “we do a really good job of starting and creating cybersecurity companies, given our proximity to the agencies down at Fort Meade,” Costa said. “You can focus on those sectors regionally and really do quite well.”
And Maryland governor Larry Hogan appears to have taken an interest in the matter as well. He plans to announce the new cyber-security initiative Thursday morning at a press event in Port Covington.
“Port Covington is a “first” for the nation and for Maryland,” Governor Hogan said in prepared remarks obtained by The Washington Post. “The initial build-out will house the largest concentration of commercial cyber security companies in the world – and the technology infrastructure of Port Covington is built with data security as a keystone.”
There is no public funding behind the effort. But the incubator brings deep connections with investors, including a Silicon Valley venture fund called Allegis Cyber.
Allegis Capital partner Bob Ackerman, a long-time Silicon Valley investor who earned the moniker “cybersecurity’s money man” for investing in the industry in its early days. Allegis is to be “dual-headquartered” between Silicon Valley and Baltimore thanks to the fund’s relationship with DataTribe.
In an interview this month, Weller Development partner Steven Siegel said the long-term Port Covington development would include cyber companies, as well as education technology and life sciences. The Baltimore Sun recently moved its headquarters there.
The incubator’s decision to move to Baltimore deals a blow to the D.C. area’s aspirations as a cybersecurity hub.
The District’s outlying suburbs of Northern Virginia and Suburban Maryland are regarded as deep reservoirs of cybersecurity talent and technology, thanks to their proximity to U.S. defense and intelligence agencies.
A 2017 study of D.C.-area cybersecurity businesses by Amplifier Ventures and the Kogod School of Business at American University found more than 800 companies engaged in cybersecurity work, but noted that about 95 percent of them are focused on government services. The study noted a “profound lack” of cybersecurity companies building cybersecurity products for the commercial business world.
But the District itself has largely failed to harness those assets. With a few notable exceptions – like a D.C.-based encryption start-up called Virtru that has raised $76.8 million from investors – there are few sizable cybersecurity companies working within the District itself.
“DC’s infrastructure is really good for government and government services, but that’s not what we’re building here,” Ackerman said. “If you go out to Silicon Valley, it could not be any more different than what you find in downtown Washington D.C.”
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