Quorum Cyber Case Study
Investment from the Maven VCTs helped Quorum Cyber make several key hires and further develop its innovative technology. The business rapidly expanded and grew in value, attracting significant interest from potential acquirers.
Increase in revenues
partnership with Microsoft
Quorum Cyber is an award-winning cyber security business which has developed advanced solutions to protect organisations against security attacks and breaches.
Quorum supports its clients through its wide range of Managed Service and Professional Service solutions. Quorum have supported businesses in a range of sectors and across the UK, Europe, North and South America, Asia and the Middle East, helping them combat the ever present cyber threat and receive a service tailored to their unique cybersecurity needs.
“We provide two basic services”, explains Federico Charosky, CEO at Quorum Cyber. “We provide pre-emptive services, trying to get people to be more secure or defensive and we do reactive services, so post attack, we’re there to help aid the recovery.”
When the Maven VCT’s first invested in Quorum, the business had ambitions to grow internationally and saw the importance of further developing its innovative offering to help capitalise on the growing global demand for robust cybersecurity solutions. During the time of Maven’s investment, Quorum increased both annual recurring revenues and headcount fourfold and entered the US market. Critically the size of contracts increased substantially during Maven’s involvement.
The Maven funding was used to make several key hires and to enhance the service offering, including innovations around both its Microsoft Azure Sentinel Security Operations Centre and the Managed Detection and Response service. These solutions quickly became attractive to a range of organisations across the world, helping protect them against cyber-attacks and ensuring that they could confidently operate in an increasingly hostile digital landscape.
Critically, Quorum also strengthened its partnership with Microsoft and is now recognised by industry commentators as a leading player in the sector, where its cutting-edge cyber solutions support many well known organisations in enhancing their cyber protection.
A changing market presents a growth opportunity
The way that technology impacts on the we live and work has changed rapidly over a relatively short timescale, meaning businesses are having to adapt their products and services to keep up with the changing consumer behaviour.
Big data breaches suggest that existing protection is inadequate and are being increasingly stretched by the changing security environment and most notably the move to the Cloud and an API (application programming interface) economy as well as significant remote working. With APIs allowing various applications to talk to each other, vast amounts of data now being hosted within public clouds, and mobile users accessing networks from a variety of devices, hackers have a bigger target to go after and placing an effective firewall around an entire business is now very challenging. In addition to cloud computing Federico comments that “an increase in people working from home, nation-state vs nation-state geopolitics mean that our services are now highly relevant.”
“Cybersecurity is now at the top of the agenda for most Boards, regardless of company size or industry,” he continues. “There has been a dramatic increase in cyber attacks that have caused real damage to organisations and nations across the world. Where before it might have been perceived as a luxury or a bit of an insurance policy, Boards are now super concerned and cognisant of the risks.”
At first, Quorum’s priority was to prove the technology and its ability to solve the problems being experienced by end users in the market. Once Federico and his team knew that they had a viable proposition based on an innovative and highly scalable product, the focus turned to growing the business and capitalising on these positive market tailwinds.
“We wanted to keep the momentum going and work with larger customers across the world, and the reason for working with Maven was because they could fuel that growth,” says Federico. “When you are a company the size we are you need that help to allow you to grow faster.”
Investment helps Quorum to secure the best talent
One of the biggest challenges for Quorum is sourcing the best talent, as the technology sector has a highly competitive recruitment market with rising salaries and skill shortages. To compete, businesses not only have to get their culture right, but must also have the firepower to respond to the tight labour market.
“Like a lot of high growth businesses, the biggest challenge is getting the right talent into the business”, says David Milroy, Partner at Maven who led the investment. There are a lot of companies looking for highly talented individuals with specific skill sets in a very small talent pool. According to McKinsey there were more than 3.12 million jobs in cybersecurity estimated to be unfilled in 2021 so hiring is competitive, takes time and is expensive. Clearly, one of the biggest attractions of taking on investment is that it gives you the opportunity to go after that talent. If you are unable to aggressively go after that talent, then there is a risk it will constrain growth and you’ll get left behind.
"Prior to Maven’s involvement we had no surplus resource” explains Federico. “99% of the investment has been spent investing in our people. We went from 25 employees pre investment to 70 people post investment within 18 months. Luxuries you can’t afford when you are a smaller, cash constrained company, like project managers or service delivery managers – those are the things that make you a good supplier - we were now able to support.”
Federico continues “One of the most important aspects in having access to a partner who can fund growth is that you can innovative quicker because you have the talent whereas previously investing in innovation meant investment elsewhere had to be put on hold.”
Benefiting through active portfolio management
Maven doesn’t just provide financial support. Maven also seeks to equip its investee companies for success. Its highly experienced investment and portfolio executives can help management teams to continue to develop their business and provide direct input and guidance on strategic initiatives such as international expansion, bolt-on acquisitions, talent recruitment and driving operational efficiencies. This close support was actively sought by the team at Quorum, to supplement the existing skills and expertise within the business. “One of the reasons we ended up choosing Maven was that we wanted a true partner,” says Federico. “We can look after the technology side of things all day long because we are cyber security specialists, but we didn’t have prior experience of scaling a business and we wanted a partner who could support us on a number of fronts as they know more about building successful companies from the myriad of businesses they have supported.”
“We wanted somebody who was actively involved, not removed”, continues Federico. “We needed someone who we knew could plug into all our needs now, adapt when our needs changed, and be there at every step of our growth journey.”
A benefit of private equity, compared to other forms of finance, is the expertise and network of contacts a well-resourced manager like Maven can offer, particularly for earlier stage companies. This access to expertise can help a business professionalise its operation by introducing disciplines vital to the transition into a larger and more valuable business, particularly as it embarks on major strategic initiatives.
“It’s impossible to get involved and suddenly expect to understand it better than management. That just doesn’t happen”, explains David Milroy. “Instead, it is about growing your business in tandem with our help, support, and strategic input. We helped Quorum introduce the processes and rigour that we would see in more advanced businesses. The company also hired a new Finance Director which made a huge difference to the business, and we also introduced a Chair to ensure good governance and someone who could challenge as well as support the Board.”
Entering into a new relationship with any investor can represent a significant step change for any business, but what quickly became clear to Quorum was Maven’s focus on the team and willingness to work collaboratively with the senior management team to understand their needs and help them to achieve their potential, without interfering in the day-to-day running of the business.
“We’ve had a fantastic relationship with Maven since day one. Their approach is completely different to what one might expect of an investor. It’s not all about the numbers. It’s about the team pulling together to achieve what all shareholders want to achieve, value creation. It’s about what are the challenges you are facing and how they can help you overcome them.” Frederico added.
Impressive growth leads to interest from trade and financial buyers
During Maven’s tenure Quorum grew rapidly, increasing both annual recurring revenues and headcount fourfold, entering the US market and making several key hires including the appointment of a Chairman and Finance Director. It also strengthened its existing strategic partnership with Microsoft and demonstrated an ability to consistently win new corporate clients across a variety of sectors and geographies.
To support the company through the next stage of its growth, the decision was taken to sell Quorum to the mid-market private equity firm Livingbridge, with Maven retaining a minority investment in the business. The exit generated a 6.5x return for Maven investors, demonstrating the significant progress the business made in such a relatively short period of time.
Federico concludes: “Our successful partnership with Maven has enabled us to accelerate growth and scale our business, and it has demonstrated what can be achieved with the right team and direction. I’m incredibly proud of the progress made with Maven as our investment partner and Quorum is ideally positioned to continue its rapid growth.