The ex-Secret Service agent who flipped a hacker is now raising a second $250M cybersecurity fund

Key points

• Stephen Ward, co-founder of Brightmind Partners, is raising a second cybersecurity fund of roughly $250 million.
• Brightmind's first fund led a Series A in SGNL, which CrowdStrike agreed to buy for $740 million.
• Ward is now the firm's sole general partner after Gur Talpaz and Tayler Sipperly left in April.

Stephen Ward, co-founder of the New York cybersecurity fund Brightmind Partners, is raising a second fund targeting roughly $250 million, about the same size as the firm's debut fund closed late last year. He is doing so without co-founder Gur Talpaz, who left in April along with another early colleague, leaving Ward as the firm's sole general partner.

Ward's background includes four years in the Coast Guard, nine years in the Secret Service, and CISO roles at TIAA and Home Depot before he moved into investing. Brightmind's first fund has made 14 investments, with one exit: SGNL, the identity security startup CrowdStrike agreed in January to buy for $740 million, 11 months after Brightmind led its Series A.

A hacker case and a podcast

While stationed in New York with the Secret Service, Ward arrested a hacker responsible for the largest credit card data theft of that era and turned him into an informant for about three years. The hacker kept hacking and, after being caught again, told the agency that Ward was involved, a claim Ward spent roughly 18 months clearing. The hacker received a 20-year sentence, and Audible turned the story into an eight-episode podcast called Operation Firewall.

You have to sell on the way up.

— Stephen Ward

Exit strategy and market timing

Ward says he is willing to sell portfolio companies rather than hold out for an IPO, and some investors asked why Brightmind did not hold SGNL longer. He says the best cybersecurity sales come between a startup's third and seventh years, and his team tracks security acquisitions to judge which buyers might want which companies.

Early-stage cybersecurity startups are raising more than later-stage rivals for the first time in more than a decade, according to PitchBook, which counts $4.7 billion in seed-through-Series B deals through September. Ward says the second fund will not be entirely cybersecurity, with about 20% focused on AI infrastructure deals.