MACH37 Cyber Accelerator recently revealed the startups participating to its 10th anniversary cohort. In conjunction with the launch of this meaningful edition of the program, Jason Chen, the CEO of MACH37, replied to our questions about himself, the accelerator, and a lot of other things. We strongly recommend you to read the interview!
Hi Jason, can you please tell us a bit more about you? What’s your background?
Hi! I am the CEO of VentureScope and CEO and Executive Director of MACH37. I am a four-time startup founder/cofounder, business strategist, and venture investor with over 23 years of professional experience across a variety of different industries. I attended the University of Virginia in the late 1990s for my Bachelor’s degree and studied history (thinking I’d apply to law school) and then attended Harvard University where I received my Master’s degree and focused my studies on the intersection between international political economics, foreign direct investment, intellectual property rights, and religion (yes, that’s a mouth full :-D). I worked in finance for ~4 years while I was in grad school, where I helped manage mutual funds and provided the back-end real-time accounting of stock market trade floor activity. After grad school, I moved back to the DC area and worked as a strategy/management consultant. The majority of my time as a consultant was focused on international economic development, where I spent the better part of 6 years working in the former Soviet Union (Armenia, Ukraine), eastern Europe (Serbia), and the Middle East (United Arab Emirates). The projects varied but focused on tax reform, bankruptcy reform, financial sector reform, and commercial and civil law reform. During my work overseas I worked with big government (US and foreign governments), regional/local/municipality level governments, big industry (Fortune 500 multinational corporations looking for greenfield investment opportunities), and startups and small/medium-sized businesses in foreign countries. It was during that time overseas that I saw how big industries and governments were utilizing consultants and could afford their services, but that the startups and small guys couldn’t. So, I founded my first company – VentureScope – in 2007 to address that underserved market. VentureScope’s original business model was either small fixed-priced projects or equity in exchange for services. From 2007-2012, I was a one-man-shop, that was basically providing a lot of the services that startup incubators and accelerators would eventually start providing. Through VentureScope, I helped co-found a weather data company called WeatherAlpha in 2010. WeatherAlpha still exists and collects, cleans, analyzes, and provides proprietary weather data to brands and advertisers for use in their marketing strategies and digital marketing campaigns. Its primary offering is hyper real-time weather data that is used for digital advertising campaigns. Through the trials and tribulations of launching WeatherAlpha, I became a huge fan/student of Lean Startup, and consider myself a disciple of Steve Blank, whom I’ve been fortunate to get to know and work closely with. I’m part of Steve Blank’s Lean Startup teaching team at Columbia University and now teach Lean Startup at several other universities, too.
Around 2012, I was asked to support a few incubators and accelerators and was eventually asked to help formally mentor and operate these types of programs. In 2013, I led a small team that launched and piloted an internal accelerator program for a Fortune 500 company over 2 years. Then, things started to come full circle and in 2014 I was asked to help an international economic development company operate an accelerator program in the West Bank, where its mission was to work with both Palestinian and Israeli founders and incentivize them to work together as a means of conflict mitigation. Specifically, in order for a founder and their company to be accepted into the program and receive capital, they had to partner with a founder from the other side of the Green Line (so an Israeli founder needed to partner with a Palestinian, or a Palestinian founder would need to partner with an Israeli). I served as the Technical Director who managed the team that operated that accelerator for 2 years. After that, in 2016 I was asked to run a TechStars pre-accelerator program focused on cybersecurity startups. It was during that program that I met the Commonwealth of Virginia representatives who oversaw MACH37. The following year, in 2017, the Commonwealth of Virginia reached out to see if VentureScope wanted to be considered for a contract to operate MACH37. We responded to this inquiry and the rest is history. Since then, through VentureScope my team and I have continued to operate MACH37 while also providing venture investments/advisory services, technology scouting, and strategic innovation consulting services to private and public sector clients.
Between 2014-2018, I also co-founded two other startups: Lunchin and HackEd. Lunchin was a company that gamified health and exercise for children. Unfortunately, it failed, but like most entrepreneurs, I learned a lot from that experience. The other, HackEd, was a cybersecurity “hands-on-keyboard” training company for both red team (attacking) and blue team (defending) aspiring cybersecurity professionals. I successfully exited HackEd when it was acquired by another training company.
Can you introduce MACH37?
MACH37 is the premier accelerator for early-stage information security entrepreneurs and cyber startups. MACH37 is a 90-day accelerator program that provides both traditional and custom startup support. Cohort companies from across the globe work on the validation of customer pain points, solution ideas, and the development of relationships that produce an initial customer base, channel partner set, and investment capital. MACH37 provides focused mentorship and support from an extensive network of visionaries, practitioners, and successful entrepreneurs from across the cyber and security industries as well as custom programs focused on entrepreneurial leadership, well-being, and culture creation. I’m also very proud to say that MACH37 is one of the first accelerators to formally implement a well-being program, focused on the mental, physical, social, occupational, financial, environmental, intellectual, and spiritual well-being of its founders. VentureScope’s COO and MACH37’s COO and Chief Wellness Officer (CWO), Jennifer Addie, is a well-being practitioner who led the development and delivery of this program, recognized by Forbes in 2020.
The name MACH37 refers to “escape velocity,” the minimum velocity needed to escape Earth’s gravitational field. We felt that this was an apt name for our accelerator because newly launched technology companies must push past forces that inherently prevent their growth. MACH37 was founded in 2013 by the Commonwealth of Virginia and in 2017, they contracted VentureScope, to provide the day-to-day management and operations of the accelerator. VentureScope acquired majority ownership of MACH37 in 2018 and completed the acquisition in 2020.
MACH37 is a member of the Global Accelerator Network and Global Startup Studio Network. In 2022, VentureScope was awarded a contract to provide the “MACH37 Accelerator-As-A-Platform” to the United States Air Force. Our MACH37 Operations Team helped launch and currently supports the operations of the Air Force’s internal accelerator program, called the Refinery, using many of the best practices and methodologies that we developed and implemented for MACH37.
Which is your overall strategy (geo/amount/sectors)?
Our goal is to identify high-potential cyber startups, coach them through the extremely challenging early stages of development, teach them the importance of well-being and maintaining founder and team health, and introduce them to a unique network of cyber professionals who can help them perform true customer discovery, find product-market-fit, and accelerate their go-to-market approach. MACH37 has always evaluated startups from around the world. When it was owned by the Commonwealth of Virginia, there was a requirement that the startups that were accepted into MACH37 set up a physical location in Virginia within two years of graduating from the program. Many of the startups that went through MACH37 were from Virginia to begin with, but given Northern Virginia’s tech corridor, and how rich it is with respect to cyber and cybersecurity talent and the pool of private and public sector customers and channel partners, MACH37 was attractive to a lot of companies across the US and internationally. As a result, its deal flow has always been diverse. When VentureScope acquired majority ownership of MACH37 we removed the requirement that startups must set up a physical location in Virginia. That being said, many of them are still interested in doing so, given the benefits of the northern Virginia ecosystem – it’s just no longer a requirement.
Another change that VentureScope made was to expand MACH37’s technological areas of interest. MACH37 was launched to be an accelerator focused on cyber technologies. It quickly focused on cybersecurity (a subset of the broader cyber landscape), given the demand signal from private and public sectors as well as the fertile workforce, industry base, and public sector market in the northern Virginia, DC, and MD regions. For these same reasons, VentureScope did not want to move off MACH37’s cybersecurity focus. However, we felt there was an opportunity to expand the aperture of cyber technologies that we evaluate and accept into MACH37 and keep to the original vision for the accelerator. As a result, we now look at cybersecurity startups as well as cyber startups “where security is important.” Think of it as the intersection between security and cyber technologies…such as space/satellite, unmanned systems, neural networks, quantum computing, AI/ML, and biotech, among others.
Given these subtle, but important changes, since 2018, we have seen an expansion of our deal flow. We still see companies from all over the US and world, but more of them, since there is no longer a geographic requirement. Additionally, we’ve seen a lot more diversity in the cyber startups that we see. Roughly 60-75% of the companies that go through MACH37 are still in the traditional realm of cybersecurity, but we have intentionally tried to identify and work with interesting “cyber” companies that fall into the expanded categories “where security is important”.
Beyond capital, how do you support startups?
It’s all about MACH37’s network. I’d argue that our network/community is just as important, if not more important, than capital. Don’t get me wrong, capital/access to capital is critical for early-stage startups…they need the runway…we get it. But, truly deconstructing and understanding the problem that a startup is trying to solve, trying to do true customer discovery on what customers want to de-risk a venture and identify real product-market-fit with a solution that is not just sustainable, but also scalable, and getting access to the people who can help make this magic happen…it all comes down to our network. MACH37 has more than 400 members in its “Stars Mentor Network” – they are professionals from both the public and private sector, small to large corporations, domestic and overseas, business strategists and engineers, as well as tech wizards and investors – and they are an incredible and invaluable resource to MACH37 and the founders we work with. The expertise of MACH37’s Operations Team/staff, the incredible network of cybersecurity and cyber professionals, the mentorship all of us provide, and the access to potential early adopting customers, channel partners, and early-stage investors via “brokered introductions” (as we like to call them) is where MACH37 excels at helping our founders. Getting our founders “outside of the building” and utilizing our network to help them get unique feedback and insights from their target market is where the acceleration in our accelerator comes from, more than anything else.
What do you like to see in founders?….And what don’t you like to see in them? I mean, is there something which impresses you at a first glance?
Here are a few key traits that we look for in founders:
Positive Relational Energy – I wish I could take credit for calling it this, but I actually recently read about it and heard it coined in an Inc.com article by Jessica Stillman. I’ve always tried to hone in on this but never had a term/phrase for it and instead bucketed it under the general category of “Leadership”. But, it’s not just being a good leader – you’ll see most investors/accelerators list leadership as a quality and I agree with its importance. But, it’s actually a very important type of leadership that I look for…and “positive relational energy” is the best way that I’ve found to describe it to date. It’s the “it” thing about the founder’s leadership…that intangible…how the founder makes other people around him/her feel…the positive, confident (but not cocky), good vibes, and calmness the founder’s presence and management style give to people around him/her. That is what will inspire the team, motivate them to do their best, energize them, help them find comfort in the uncomfortable ambiguity of a startup, and help them deal with and push through the highs and lows of the startup roller coaster ride in a healthy way.
Healthy Persistence – being an entrepreneur is both a calling and one of the hardest things someone can do in their career/life. Do they have the mental fortitude and persistence to push through and lead their team through the trough of sorrow? Can they do that without being stubborn – can they be persistent but coached and able to really read and interpret feedback from the market? Can they do that without sacrificing their own or their team’s health?
Self-Awareness – meaning that they are aware of their limitations as a founder and actively look for employees and mentors that complement those areas where they may be less strong.
Coachability – they understand that they don’t have all of the answers, and they understand that MACH37 and its network are going to challenge their assumptions and push them to do true customer discovery to validate and invalidate their assumptions. That’s…HARD. It’s not easy for founders to take their work passion and something they’ve built on their own and love and source critical/constructive feedback from the market. The willingness to put their emotional attachment to their startup to the side, and source, listen, and test/implement recommendations from others is hard. A lot of founders say they want this / will do it, but it’s another thing to find the founders that will truly do it. The ability to learn, make smart pivots, and make data-based decisions is something many investors look for in teams, so MACH37 works to identify teams who demonstrate that willingness and capability and enhance it as they go.
Vision – a lot of entrepreneurs can see an opportunity…a business opportunity…and they aren’t necessarily wrong. But, entrepreneurs see the opportunity that others can’t see – and can see a future. Do they have the vision to identify true disruption, while maintaining a grounded vision of creating a realistic path to bring real disruption to life and create that future? Like “leadership”, it’s more of an “it” thing about their vision…an intangible that separates them from the rest of the entrepreneurial pack.
Prior Startup Experience – if someone has worked at a startup before as an employee and seen the inner workings of a startup/experienced the ups and downs, knows what they are getting into, and has a sense of the things they will try to replicate and things they will try to avoid as a founder, that is a big plus. If someone has been a prior founder before, that’s an even bigger plus. Prior successful exits are great, but not necessary…failures are OK, too…so long as the founder has a desire and aptitude to learn, is learning from prior startup experiences, and wants to continue to learn. It’s like what they say in Silicon Valley – “What do you call a failed entrepreneur? Experienced.” A “seasoned” founder can make a big difference to the company and its team, usually because they have some or all of the traits listed above, and they know the answers their startup needs to be successful aren’t inside their heads – they are in the market which means they need to learn from the market before they try to sell to the market.
As for what I don’t like to see: a founder that is too cocky and thinks he/she already has all of the answers and says “I just need to be introduced to customers and investors who are ready to write checks” – that is a big red flag.
Please, tell us a bit more about the portfolio. You can list five startups their path have made you particularly proud of.
More than 80 companies have graduated from MACH37, and we are proud to say that more than 80% of them are still in business and more than 60% of them have raised follow-on capital. We think those are pretty great measures of success for MACH37 and demonstrate the value we bring to cyber founders and their companies. Here are a few companies that we are particularly proud of:
SylLab Systems – Fall 2019 cohort. They have very unique post-quantum encryption tech. Their founder, Bart Slowik, is extremely dedicated to his company and its future. This cohort was pre-COVID and therefore in-person. Bart flew from San Francisco to DC every week to attend our workshops and events. Since MACH37, SylLab has since won multiple competitions, including 2nd place in the 2022 Quantum World Congress.
Obtego Cyber – Fall 2020 Cohort. Obtego Cyber offers a solution that renders an attack surface invisible with zero open ports in a way that can improve performance. They pride themselves on a design that allows for numerous deployment approaches to ensure existing operations are not disrupted. While at MACH37 Obtego demonstrated an incredible aptitude for learning and applying new insights, highly evolved tech, and a very collaborative approach to working with the network from their cohort members to mentors to the ops team to investors. They ran into some challenges in protecting and maintaining their IP, but their CEO, John Joseph, successfully navigated difficult situations and is hard at work bringing their product to market – he/his company is a great example of not just great tech, but keeping themselves afloat and overcoming some unexpected challenges.
RunSafe Security – Fall 2017 Cohort. RunSafe Security offers a suite of offerings centered on hardening software and reducing attack surface. Their technical approach really sets them apart, as does their team, led by their CEO, Joe Saunders. Their method of hardening software and offerings of pre-hardening open source software has attracted big clients and a lot of attention around securing supply chains – it’s a great example of approaching a problem from a completely different angle and creating a unique and extremely effective solution. RunSafe has become a client success and has raised several rounds of significant capital. They have remained close to MACH37 and continually find time to give back to future cohorts despite their success.
Fort Mesa – Spring 2019 Cohort. Fort Mesa offers continuous risk assessment and vulnerability management with the intent of getting ahead of incidents rather than waiting for them to happen. Their ability to integrate with so many key applications has demonstrated their product-market fit, aided adoption, and expanded their partner network. Fort Mesa also demonstrates the strength of their partnerships through their frequent livestreams. Their founder, Matt Fisch, is one of the sharpest founders we’ve worked with and has a genuine approach and means of working with customers – a trait that helps differentiate him from other founders.
HyperQube – Fall 2017 Cohort. I don’t think we’ve worked with another founder who embodies what we mean by coachability and self-awareness more than Craig Stevenson. When he entered MACH37, he was very raw. Super smart founder with some very cool tech, but the world of entrepreneurship was completely new to him. He had previously worked for government contractors and was an extremely talented technical founder. But, he didn’t have a great deal of business and business management experience. The difference between him when he started at MACH37 and where he was by “Launch Day” (our version of Demo Day) was night and day. Everything had changed – he figured out how to wear his entrepreneur shoes. He went on to generate revenue, and raise capital, and just recently his company was acquired. He still returns to MACH37 and leads a workshop for each of our cohorts about the things he learned at MACH37, the things he encourages the founders to take advantage of through MACH37, and his post-MACH37 journey – it’s a great story with a healthy dose of reality mixed with inspiration and successfully making it through to the other side. He doesn’t realize it, but he is the guy I reference all the time to our cohorts as someone who trusted MACH37 and our team, and jumped in and did everything we encouraged him to do to figure out a path to success. He’s a great story and I’m extremely proud and happy for him and his success.
Regrets? Do you have a personal anti-portfolio?
Yes and no. From a financial ROI standpoint, there are companies that we did not invest in and that have gone on to do great things. However, the founders weren’t a match for us. We have specific and important values that define how we work with and support the people we work with, and it’s important that the founders we work with recognize and share those values. Had we just been an investor and bought a position on their cap table, that’s one thing. But, VentureScope and MACH37 don’t have arms-length relationships with the companies that go through the accelerator or their founders – we roll our sleeves up, get dirty, and work with our founders. Sharing mutual values, and trust, and having a positive working relationship with the founders is critical. So sure, if I were just looking at dollars, there are some missed opportunities and I think about them every once in a while – hey, I’m human ;-). But we aren’t a typical investor, and therefore we need to consider our brand, and what we stand for, and balance everything that goes into the business relationship. We have several highly successful portfolio companies that are not only solving tough problems with great solutions/tech, and have raised a few rounds / been validated by other investors (which is nice). But, they also have awesome founders who are a great match for us. Additionally, we have other amazing founders who have launched great companies that have raised smaller amounts, or in some cases not raised, but have still found product-market-fit, are generating revenue, and are likely to be successful small to medium-sized niche businesses. They may not be a target for VC investment with hockey stick growth, but they could be potential downstream acquisition targets. Either way, I’m very happy for those portfolio companies and am proud to have great working relationships with their founders. So, no, I don’t have much in the way of regrets with respect to our portfolio.
Which sector/s would you bet 2 cents in the next five years?
There are three key sectors on my radar currently: the artificial intelligence (AI), biotech, and semiconductor sectors.
AI is likely at the top of everyone’s list right now, given the rapid developments and widespread adoption we’ve seen since the release of Open AI’s Chat GPT. This has spurred a new wave of VC and investor funding of the AI sector – and when coupled with the growing commercial and consumer demand for similar AI-enhanced products and services, this will be a sector we continue to see grow and evolve for several years to come.
The biotech sector is one to keep your eyes on over the coming years. There are several new technological advancements coming out of both academia and the commercial sector that may influence society’s perception of healthcare in the future, including enhancing human performance, 3D printing organs (or components of organs), and embedded medical devices (both medically necessary devices, as well as elective consumer devices). As we see certain technologies moving on to human clinical trials (such as NeuraLink) and an increase in the number of hackers targeting biodata or DNA-collection companies, I’d expect a new market to begin popping up around this area to meet the growing niche needs.
The semiconductor sector is nothing new, but there has been increased investor interest in this area for several reasons, including the supply chain disruptions that manifested during COVID, and the recently passed U.S. CHIPS and Science Act which looks to boost U.S.-based semiconductor research, development, and production with nearly $150 billion USD dedicated to the effort from both U.S. Government and commercial sources. We are already seeing an increase in the number of startups and innovative capabilities emerging around this area – and this large influx of funding is only expected to accelerate this trend.