VENTURE capital firm ICT Fund has been backing cryptography startup Sixscape since a pre-series A round in 2016. In December 2018, it made a second injection of funds, raising its total investment to S$3.25 million.
Underlying this commitment is a belief that Sixscape has solved an important authentication and encryption problem with its decentralised certificate-management technology.
The startup specialises in secure communications solutions, including authentication solutions, over the Internet and for apps. Sixscape has a partnership with Belgium Internet security firm GlobalSign and has four clients in the Middle East. It started commercialisation towards the end of last year, and is in talks with some large tech companies in Singapore for a joint project on authentication and encryption.
ICT Fund, which has Tembusu Partners and Pepri Ventures as co-general partners, counts the National Research Foundation as its largest limited partner.
ICT Fund managing partner Brijesh Pande told The Business Times why Sixscape's authentication technology is the real deal:
What was the most important factor shaping the move to back Sixscape?
It is expected that there will be more than 50 billion connected devices by 2022, and an exponential increase in the number of financial and other sensitive transactions online. Security solutions related to encryption and authentication is an area of significant interest to us.
Cryptography leveraging Public Key Infrastructure (PKI) is widely regarded as having the capability to provide the most secure encryption and authentication solutions. It is used to facilitate the secure electronic transfer of information for a range of network activities such as e-commerce, Internet banking and confidential e-mail. It is needed for activities in which simple passwords are an inadequate authentication method and more rigorous proof is required to confirm the identity of the parties involved in the communication, and to validate the data being transferred.
But two significant issues stood in the way of a wide deployment of PKI.
One was that no one had developed technology to handle scalable user certificates, which are unique digital identifiers for each user or device. Currently, anyone deploying user certificates generally allocates these certificates manually. There is no real scalable automated solution.
The second issue was that PKI was still a centralised architecture, meaning that hackers could access millions of user credentials just by hacking one central server.
Sixscape has revamped the deployment of cryptography by developing a proprietary protocol and creating a certificate infrastructure that enables for seamless scaling of user certificates and the decentralising of certificate management.
The capability and track record of the founding team led by its CEO Lawrence Hughes, a global authority on cryptography and Internet Protocol Version 6 (IPv6), augmented the technology attraction of Sixscape.
How did the team decide how much to invest in the startup?
The amount to invest in a company is based primarily on the amount of capital needed to continue developing and deploying the technology for an estimated 18 to 24 months. For all startups, we are also guided by our fund criteria - to not exceed 20 per cent of our fund size, in order to have a diversified portfolio. We are well below that limit for Sixscape, and can make further investments.
What is the under-appreciated part of Sixscape's business?
The core technology underpinning Sixscape makes it possible to do authentication and encryption to the degree where each device is its own unique server. This enables true end-to-end communication without the need for intermediary servers. This ability is now one of the most under-appreciated part of Sixscape's business. It will definitely come to the fore upon IPv6 and 5G proliferation.
How do you see ICT Fund adding value to the startup?
Being a specialised fund that invests only in enterprise technology companies, ICT Fund differentiates itself in that it has dedicated in-house specialists to proactively work with its portfolio companies in almost all areas. It also has strong relationships with other technology companies to create partnerships.
ICT Fund has in-house resources to work on areas such as technology, operations, going to market and in financial planning. For example, the fund has a dedicated chief technology officer who took a hands-on role at Sixscape to drive the product planning and roadmap to get the products enterprise-ready. ICT Fund's in-house operating partners are dedicated software specialists who have run go-to-market workshops and helped develop sales processes, product pricing guidelines and branding initiatives at Sixscape.
Any interesting or contrarian tidbits that you'd like to share?
Cryptography is a specialised field. The ability to leverage certificate-based solutions for military grade authentication and encryption is a complex skill to master. Successful deployment of this technology has many applications in the Internet of Things, IPv6 and 5G era - especially in doing away with username and password, one-time password or centralised authentication and encryption solutions.
With Sixscape having re-thought and re-done the entire PKI infrastructure, we are convinced that it has built a technology which can make PKI truly scalable and that, too, in a decentralised manner - thereby making future transactions and communications much more secure than they are today.
- This report first appeared online in Garage, The Business Times' startup section. Get more startup-related news, analysis and opinions at bt.sg/garage.
ICT FUND AT A GLANCE
- Managing partner: Brijesh Pande
- Year of inception: 2015 (legal name: Tembusu ICT Fund I)
- Focus: Software companies
- Size: S$35 million
- Time horizon: Eight years