Extending our relationship with VGS

Jonathan Heiliger
Dec 21, 2020 · 3 min read

We (Vertex Ventures US) have been investors in Very Good Security (VGS) from the very beginning: we led the seed round in 2016 and have participated in both VGS’s Series A and B financings. Our philosophy as a firm is to make a limited number of investments per year so we can hyper-focus on providing support to our portfolio founders.

When we initially invested, the company was 6 people and had a vision for being a secure financial transaction proxy. Over the subsequent four years, the company has grown to over 180 employees, has raised two financing rounds totaling $45 million from Andreessen Horowitz, Goldman Sachs Growth, Visa, and other investors, and accrued several hundreds of customers in pursuit of becoming the global leader in security and privacy infrastructure for the Internet.

VGS operates at the intersection of two high-growth, multi-billion dollar markets: data security and compliance. Importantly, most modern regulations focus on the protection of sensitive data or personally identifiable information (PII). Large enterprises typically spend many months and millions of dollars to achieve and maintain compliance — this only represents the initial opportunity for VGS. We believe VGS is uniquely positioned with the only Zero Data™ product, offering enterprises the ability to transact with sensitive data without the liability of securing it.

VGS provides a secure data vault for fintech and enterprise customers to store their sensitive data, alleviating the need to meet regulatory compliance requirements. By encrypting and tokenizing sensitive data, VGS not only eliminates the risk associated with data, the service increases its utility by activating and presenting it on a network. Some of the key benefits are:

  • Gross simplification of maintaining a variety of regulations, which increases the pace of innovation
  • Reduction in PCI DSS compliance scope
  • End-to-end data security
  • API-first access to enable developers to pilot and implement quickly

According to a 2020 report from Juniper Research, annual revenues from tokenized payments — where account details are replaced with data useless to fraudsters — will exceed $40 billion by 2024, growing from an estimated $17 billion in 2019. Of this, over $30 billion will be through e-commerce transactions. As core banking and payments infrastructure are modernized, the importance of tokenization will become embedded to create new modes of finance. This creates a massive business opportunity for an independent network that bridges the old world with the new and makes VGS a sticky horizontal platform.

We earned the right to lead the $60m Series C financing by being engaged partners since our initial investment four years ago. Being engaged doesn’t just mean rote functions like sourcing an occasional executive candidate, to us, being engaged is defined by being available for countless weekend phone calls, incessantly questioning whether it’s “good enough” and being a trusted sounding board for the confidence and doubt that fill a founder’s mind.

As we keep our portfolio intentionally small, we have a vested interest in our portfolio founders’ success. VGS has been on a thoughtful growth trajectory since the beginning, and because the company and founders have continually exceeded all expectations, we are doubling-down on our investment in them.

The founders, Mahmoud Abdelkader (CEO) and Marshall Jones (CTO), saw a tremendous market opportunity before it was obvious and have adeptly navigated building a complex, scalable product, maturing as leaders, and setting a high standard for themselves and the entire team.

We’ve been active advisors and partners alongside Mahmoud and Marshall, and we are thrilled to continue supporting them and the team at VGS for many more to come.

Vertex Ventures

Vertex Ventures is a global network of funds.

Jonathan Heiliger

Written by

Love building anything complex.

Vertex Ventures

Vertex Ventures is a global network of funds, comprised of affiliates in the US, Israel, China, Southeast Asia and India. This is a unique platform our portfolio companies realize by leveraging the combined experience and resources of our global partners.

Jonathan Heiliger

Written by

Love building anything complex.

Vertex Ventures

Vertex Ventures is a global network of funds, comprised of affiliates in the US, Israel, China, Southeast Asia and India. This is a unique platform our portfolio companies realize by leveraging the combined experience and resources of our global partners.

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