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Press Contact: Christopher Parente, Strategic Communications Group
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« More Media CoverageA Courtship in the New Wireless WorldTrust Digital gets its funding from Core Capital-thanks to a spiffy featureInvestment Dealers Digest — November 29, 2004 As more and more consumers have begun linking and synchronizing mobile devices with company computers, IT departments are facing a whole new round of security challenges in protecting company information. That's good news for Trust Digital, a start-up that specializes in the burgeoning mobile security market. It recently landed a pain-free $3.5 million in its first fund-raising round from Core Capital Partners, in what could be viewed as a classic courtship in wireless financing. While venture capital and private equity shops have been piling into security related investments since the attacks of 9/11, mobile security is an area only starting to take shape. Despite investors' ongoing wariness towards technology start-ups, Trust Digital, as an early entrant in the area, had a very easy time raising its first round of funding. "We were able to capture attention and get on the radar screen of a number of companies in the security space, then we were able to recruit some very good names onto our board of directors," says Kevin Shahbazi, Trust Digital's founder and chief strategy officer. Shahbazi adds that the company's technology proved so interesting to the venture capital community that it generated interest among some of the top-name companies in the security industry and received multiple term sheets from would-be investors. Ultimately, he says, Trust Digital was able to choose its funding based on which VC it believed would be the best match. Shahbazi says he developed Trust Digital's current wireless security software-the firm was launched in 1995-about five years ago and quickly received incubation funding from Applied Technologies Inc. After building an initial client base, he started looking for its first round of VC funding in October 2003, and wound up closing the round with Core Capital by June 2004. Though Core Capital wasn't the only VC interested in his company, Shahbazi says he chose the firm because of its fund managers' deep understanding of his company's product, and its ability to help the company develop its management team. "When we looked at the security space, we wanted to bring in investors who were quite acclimated to the security notion in general, with mobility and wireless security," says Shahbazi. "We wanted someone who would be passionate in terms of being hands-on on the operation side." He said his decision to go with Core Capital came down primarily to Pascal Luck, a partner at the VC with a deep understanding of Trust Digital's technology and its plans. Core's search For its part, Core Capital began its search for a mobile technology investment just over a year ago, having identified wireless security as an up-and-coming technology yet to be exploited by the investment community. After meeting with a handful of companies specializing in wireless security software, Core Capital's Luck says that the VC chose Trust Digital because its technology went beyond security by offering companies the ability to detect and manage any outside devices, such as PDAs or mobile phones, that employees might synchronize with their networks. "A lot of these devices are purchased by individuals who then bring them into their companies," Luck says. "That's a relatively large security risk if people synchronize data at home and then they synchronize data at work-they can transmit viruses or even steal corporate data." What really caught his eye was the management feature that Trust Digital incorporated into its software. It notifies an IT department of any outside devices coming into or out of its network, and allows it to manage those devices, preventing anything but corporate-sanctioned devices from removing data from its network. "They stuck out because they had some good customer traction, and people were pretty excited about their management [feature]," he says. Jonathan Silver, a managing director with Core Capital, describes it as "security at the edge." Many companies have spent a great deal of money on corporate data networks, he says, but now that mobile devices have grown so rapidly in popularity, "it has really put a lot of pressure on corporate security." He notes that the average BlackBerry or Apple iPod now contains a 40 gigabit hard drive-enough memory to download significant information from a company's network. And as more and more companies tumble to the risks of such mobile technologies linking to their networks, Core Capital is betting that wireless security will become a major growth industry. In addition to funding Trust Digital's first round of funding-which it accomplished by partnering with Avansis Partners, a small Washington, D.C.-area VC firm-Core Capital has been working to help bulk up Trust Digital's management team. Core Capital brought on a new chief executive at Trust Digital, Nick Magliato, who was most recently a venture partner with VC firm Venrock Associates and a former senior vp of operations for Internet hosting application provider USinternetworking Inc. Magliato has already brought on Norm Laudermilch as the company's new chief security officer. Laudermilk was a former senior vp of operations at managed security services provider Riptech Inc., a company that has since been acquired by Symantec Corp. Though Trust Digital is hardly alone in its field, its management believes the company is further along the development path than its two biggest competitors, Dallas-based Credant Technologies and Stockholm-based Pointsec Mobile Technologies, a security technology company that only recently moved into mobile technology. What sets Trust Digital apart, Magliato believes, is its attractiveness to investors-especially because it has been able to get as far as its competitors with far less funding. Though Credant Technologies has already had its first two rounds of funding-raising a combined $40 million-Magliato says that Trust Digital has managed to develop its technology just as far, and in the process land such major clients as the Mayo Clinic and one of the largest financial banking houses around-all on a single round of venture funding. ------------- Press Contact:Michael Riemer, EVP « More Media Coverage |
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