Government agencies are spending more and more to combat the surge in cybersecurity threats. Enter Godspeed Capital, a Washington DC-based lower-mid-market private equity firm founded in 2020 by Douglas T Lake Jr, previously a partner at DC Capital Partners. Godspeed invests in technology and services for defense and government agencies. In April, the firm formed a strategic partnership with East Rock Capital LLC. And in December, Godspeed bought Varen Technologies, a provider of cybersecurity, software and intelligence services for the defense and intelligence communities, for undisclosed terms. PE Hub interviewed Lake about the acquisition.
“Cybersecurity spending is growing at close to double-digit rates,” Lake said. “That pace will continue, because the threats are by no means slowing down. Our peer adversaries of Russia, China, North Korea, Iran all have capabilities and are utilizing them to create problems for our economy and our government.”
Varen was founded in 2005 by Marty Leshin, president and CEO. Leshin formed Varen after leaving Booz Allen Hamilton, where he had been a senior partner.
Lake plans to grow Varen organically by expanding its customer base, investing in technology, talent acquisition, business development and corporate infrastructure, as well as through acquisitions.
“The goal is to create greater opportunities, broaden the available market, all the while using technology to innovate and differentiate from competitors,” he said. “We have already identified over a dozen potential add-ons to this platform investment.”
Godspeed sees 125 to 150 deals annually and aims to close on two or three new platform investments per year, Lake said. Varen has already closed two add-on deals, with announcements expected soon.
“We believe that bringing complimentary businesses together on an accelerated basis, while partnering with senior management and spreading ownership so that everyone is aligned and incentivized, creates a powerful dynamic out of the gate,” Lake said.
While Varen is currently focused on the defense marketplace, Lake expects to expand it into the commercial sector. “There are real problems in the cybersecurity space with huge exposures, and the commercial sector is growing at an astronomical pace,” said Lake. “There is huge opportunity in that market, and we plan to go after it, eventually.”
G Squared Capital Partners served as financial adviser and Miles & Stockbridge served as legal adviser to Varen in the deal with Godspeed.
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