FORTUNE — IBM (IBM) this morning announced an agreement to acquire Trusteer, a provider of software that helps protect organizations against financial fraud and advanced security threats. No terms were disclosed, but an Israeli press report puts the price tag at between $800 million and $1 billion.
So Fortune decided to speak briefly with Steve Krausz, a venture capitalist whose firm USVP led a $6.1 million investment into the company five years ago. What follows is an edited transcript of our conversation:
FORTUNE: How did you first hear about Trusteer?
Krausz: USVP has a long history in the security space, with companies like Check Point Software (CHPK) and Impreva (IMPV). In fact, I’m still on the board of Imperva with [company CEO and co-founder] Schlomo Kramer — and another Imperva co-founder is Mickey Boodaei, who co-founded Trusteer. So I knew both of them. Plus, we have a very active strategy of investing in Israeli companies, but from the West Coast. So Schlomo invested in Trusteer’s Series A, and we came in on the Series B as the company’s only VC investor.
That was back in the summer of 2008, right? Rough time to back a startup aimed at financial services companies…
Yes. We closed the deal in August 2008, and then then the financial crisis hit the next month. In fact, our first board meeting was in October and we sat around the table wondering if we had any customers who would be solvent in 90 days. But we didn’t lose faith, both because of team and because our original investment was largely based on what we believed would be explosive growth in online banking.
Why didn’t Trusteer raise a follow-on round?
They didn’t have to because they were able to find good, large accounts. And they ran a very tight ship without really building a large sales and marketing organization. The team knew all the customers and what they wanted.
Did you think it was an IPO candidate?
I think it had the potential to be public, it was certainly growing fast enough, but IBM did a great job of presenting itself and its advantages to Trusteer and they prevailed.
When you say “they prevailed,” does that mean there was an auction process?
I’m not getting into any of those details.
It’s been five years since you first invested. What surprised you the most?
The money. When we originally did the deal I certainly had an expectation that it would follow a more normal financing trajectory for security companies. I never imagined that they could get to this point on just two checks. It was a very pleasant surprise.