The first UK-based fund investing purely in cybersecurity firms, C5 Capital, has launched its $125 million (£73 million) fund by investing in a promising Hungarian security unknown called BalaBit.

Founded by Nazo Moosa, formerly of Carlyle Technology Partners, and entrepreneur Andre Pienaar, the ambition of the Fund is to do for the European security space what dedicated funds have done for similar startups in the US.

Strictly speaking, Balabit is the Fund’s second investment after it took a stake in medical equipment maker Metrasens, but the $8 million Series A being sunk into BalaBit is its first pure security funding.

Founded as long ago 2000, BalaBit sits in the interesting but emerging sector for ‘privileged activity monitoring’ (‘PAM’ in the off-putting market jargon), systems that monitor for insider threats abusing privileged access.

The firm has started pitching itself to journalists and analysts across Europe in recent months with the claim that its technology could have stopped the sort of attack suffered by US retailer Target, which involved the mis-use of a partner account to move around the firm’s network.

“We believe that managing human risk is an under-invested part of information security.  BalaBit offers a market-leading suite of products to address this threat,” commented C5 Capital managing partner, Nazo Moosa.

"A core component of our investment approach is our ‘all hands’ engagement, which means we bring all our resources to bear for a small number of companies in order to actively drive value.  BalaBit is a representative case as it seeks to launch new products and expands overseas,” she said.

It will fascinating to see how the money sunk into BalaBit by C5 Capital aids its expansion; Hungarian firms are an unheard-of novelty in the tech sector. The investment will be used ot funds sales expansion in the UK and beyond.

Customer of BalaBit include Exeter University and financial firms including Handelsbanken, Fiducia IT AG and Norwegian telco Telenor.   

In remarks to the Financial Times, C5 Capital’s Noosa also mentioned the sudden advantage European and UK security firms had in the post-Snowden world where US technology was no longer universally trusted.

Undoubtedly, security has grown into one of the three dominant markets for IT systems along with mobile and cloud so the economics are also on the Fund’s side. European security firms remained under-valued compared to US startups, she said.