Cybersecurity startup Forticode lands $1.3 million investment after “throwing away one million lines of code”
Monday, March 5, 2018/
Melbourne cybersecurity startup Forticode has received a $1.3 million investment from Aussie software company Pronto Software in what founder Tony Smales says is a “critical junction” in his startup’s history.
The validation of the startup feels doubly good for Smales and his team, given that just 18 months ago the three-year-old startup tore down its pioneering product and rebuilt it all from scratch.
Forticode’s main offering is a product called Cipherise, which allows businesses to share information and interact with users’ credentials through a mobile-first app, which Smales describes as “adaptive”. This means businesses choose how much of the user’s data is given to them and this can be done without the user ever having to reveal or write down their credentials.
“Everyday we interact with a bunch of digital services, and what’s happening on the consumer end is that more and more consumers are holding businesses accountable for their digital safety, but the organisations still need those consumers to engage with their services,” Smales told StartupSmart.
“So the problem space became how can we provide simple access to verify someone to be who they say they are, against the inconvenience of traditional security models, which can often leave businesses vulnerable to cyber attacks?
“And it’s a massive problem that lots of companies have tried to put a solution together for. I have great admiration for all those who have tried, but it’s always being solved for the business angle, rather than the personal consumer-focused angle.”
Although Smales recognises the need for a consumer-first focus now, speaking “bluntly”, he acknowledges when he first started putting together the tech for Cipherise in 2011, two years before the business ‘officially’ launched, the consumer focus wasn’t there.
While he says the tech was solid and secure, the initial product couldn’t be easily used by businesses, and the user experience “wasn’t that great”. This lead to a point in April 2016 where — despite having received numerous rounds of investment — the team put “our entire tech stack in the bin” and started again.
“Let’s just say it was a very memorable day, especially when I had to explain to the board and our investors that we were literally throwing away one million lines of code. Our runway also wasn’t huge at that point — we had about eight months left,” he says.
“We took our learnings and started from the ground up and made it something that could be used by consumers and organisations. There was a bit of trepidation as in those times you’re never 100% sure you got it right.”
$1.3 million investment from Pronto
At the same time as building an entirely new MVP, Smales was also in the midst of seeking fresh investment, which came in the form of a $1.3 million private investment and partnership with Pronto Software.
Pronto is a 40-year-old Australian software business that provides business management software to SMEs, and the two companies were introduced through a mutual connection. What began as a commercial discussion was soon built into a strategic partnership.
Smales says the opportunity for Forticode is huge in terms of the competitive and commercial advantage both Pronto and Forticode will receive, with Pronto hoping to use the startup’s tech to improve its customers’ user engagement by baking it into its systems globally.
But finalising the partnership wasn’t simple, as Smales said Pronto enlisted a private company to assess the startup’s company architecture and another company to do a full source code review before it could “tick the box” of Forticode’s software being secure, he says.
“At that point, they were keen to back us and invest in us, and that gives us a real credibility stamp and was truly a step up for us as a business,” he says.
Victorian Minister for innovation Philip Dalidakis has also backed the partnership, saying in a statement: “Victoria is already Australia’s cyber security capital, so we’re delighted to see two great companies in Pronto and Forticode come together here in Victoria and further strengthen our cyber security sector. We wish them every success in their new partnership”.
The money will be poured back into Forticode’s product and IP pipeline, with various parts of the tech still needing to be built. Looking back at his mid-2016 decision to change tack, Smales says he doesn’t have any regrets. The worst thing startup founders can do is to not make a decision at all, he says.
“Being hamstrung by indecision is a guaranteed way to get nowhere at all. You’ve got to be prepared at a certain point in time to be conflicted on the right thing to do, and whatever choice you make, make sure they’re inclusive,” he says.
“Make sure your team, everyone supporting you from shareholders to your board, are facing the same way.”
Forticode is now hoping to support the local Australian industry and focus on engaging Australian companies through partnerships, with Smales saying he’s tired of seeing successful local companies leave for other countries.
“We want to have a shot at being the next Australian success story,” he says.