Three years ago, in January of 2021, Merlin Ventures opened our office in Tel Aviv with a goal of finding the best early-stage cyber startups in Israel and bringing them to the US market. But nearly 25 years before that, our sister company, Merlin Cyber, opened its office in the US, and has continued to grow its business of helping companies succeed in the US Government market.
Over the last few years, however, we’ve seen a challenge in bringing companies into the government market. As the majority of companies moved from offering on-prem software to being SaaS-first and eventually to being SaaS-only, we were hitting a very big snag. While on-premise products could be sold to government agencies with relatively little required in terms of security compliance, cloud-based solutions fall under a compliance requirement called FedRAMP that regularly takes years to complete and costs millions of dollars. Even for late-stage, public companies, it’s a huge barrier to entry. For innovative, early-stage companies it’s a showstopper.
And so, three years ago, around the same time we started building out Merlin Ventures’ presence in Israel, Merlin Cyber started working on a project with the goal of significantly reducing the burden of getting through FedRAMP to allow partners to enter the government market and speed up their time to revenue.
Today, we are excited to announce that that project, Constellation GovCloud®, has achieved its Provisional Authority to Operate (P-ATO) from the US Government and is now open for business.
What does that mean for software companies? Constellation is unique in its ability to accelerate a company’s path through the FedRAMP process. In addition to offloading the majority of compliance tasks, it reduces a partner’s compliance costs as their revenues grow in the public sector market. Constellation partners get a lower cost, more predictable path through the FedRAMP process, while relying on a team of experts that handle the hardest parts of the journey.
Constellation GovCloud® is meant to bring the best software innovation into the US government market, and is not limited to Merlin Ventures portfolio companies. But on the Merlin Ventures side of things, we are very excited about the possibilities Constellation GovCloud opens up to help accelerate our portfolio companies’ entry into the massive US Federal, State and Local government markets.
Today our portfolio companies will tell you the greatest value Merlin Ventures brings is around understanding US commercial markets and getting early customer traction, and that isn’t changing. But with Constellation GovCloud®, that’s only half the story. We invest in the most innovative companies in the world, and with Constellation, we’ve just opened up a massive, untapped market for them.