- Dan Scheinman did not even wait to hear a pitch before writing the first check into Zoom.
- He was also SentinelOne’s angel, which became the most valuable cybersecurity IPO Wednesday.
- Scheinman tells us why he’s extremely choosy, only investing in about one to two companies a year.
- See more stories on Insider’s business page.
When longtime Cisco executive Dan Scheinman heard his former colleague Eric Yuan was developing a video conferencing app in 2011, he did not even wait to hear a pitch before writing the first check into
Yuan had tried unsuccessfully to develop the app at Cisco but, as we previously reported, higher ups were not interested. He struggled to attract seed investors and even his own wife was skeptical of the idea.
What did Scheinman see that inspired him to write a $250,000 check without skipping a beat?
For one thing, he liked that Yuan was in his forties at a time most investors were only interested in backing hotshot young founders.
“If you just try to copy what everyone else is doing, you’re going to end up with sixth- and seventh-tier companies,” Scheinman said.
He also felt Yuan possessed the perfect qualities to be successful. He was more interested in that than the actual substance of whatever Yuan was pitching.
“In this business when you’re investing early, you’re investing in people,” Scheinman said. “You’re looking for those rare founders who have customer love, technical brilliance, and the drive and determination to build greatness. When you run into those, you write a check.”
Scheinman says it was those same qualities that led him to Tomer Weingarten when he was raising for his cybersecurity startup, SentinelOne, two years later.
“Again, I wrote a check almost on the spot,” Scheinman said. “I did see the presentation that time though.”
He says he was warned by other investors that the endpoint security market, which protects a users’ devices from being exploited, had too many competitors.
“People thought it was too late, but I really believed in Tomer’s drive and vision and I really thought he was ultimately going to build the first modern endpoint product, which turned out to be true,” Scheinman said.
Scheinman was at the New York Stock Exchange Wednesday as SentinelOne started trading, with shares opening at $46 dollars a share, well above the $35 IPO price. At market close, its over $10 billion market capitalization made it the biggest cybersecurity IPO in history.
“It’s a really incredible day,” Scheinman said.
Scheinman’s early involvement meant a board seat and 1,423,149 shares, one of the biggest individual stakes, according to regulatory filings. At the $42.50 closing price on Day 1, that stake is worth more than $60 million.
He also sits on Zoom’s board and owned 1.2% of the company at the time of its 2019 IPO. Zoom now has a market capitalization of more than $114 billion dollars.
Since becoming an
a decade ago after leaving Cisco, Scheinman says he’s been extremely choosy, only investing in about one to two companies a year. He also backed Arista Networks and Tango Live, now a streaming platform valued at more than a billion dollars.
Despite his success, Scheinman says his low-key Bay Area lifestyle has remained exactly the same.
“Because I’m older, there’s literally been no change,” Scheinman said. “We stay very grounded. Same wife. Same kids.”
One thing that has changed is the focus of Scheinman’s investments. He says there are now too many investors chasing older founders, so he has had to find a new niche.
“I’m finding technical women have a hard time raising for whatever reason,” Scheinman said. “Four of the last six or seven things I’ve done have been founded by women.”
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