Sydney coding security startup Secure Code Warrior has raised $4.93 million to boost its US business, but co-founder and chief Pieter Danhieux says he didn’t necessarily need the money, and could afford to be picky when choosing investors.
The funding comes from Australian venture capital fund AirTree Ventures and Washington DC-based Paladin Capital Group.
Former Nuix chief executive Eddie Sheehy, who is a previous angel investor in the startup, has also now joined the board.
Launched in 2016 by Danhieux and Matias Madou, both Belgian natives with backgrounds in cyber security, Secure Code Warrior is a Software-as-a-Service platform that educates developers about how to write code securely and within their company’s guidelines.
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Historically, developers have not been very aware of security issues, and so once code was completed, security experts were coming in to “fix up the holes”, Danhieux tells StartupSmart.
“The solution was not really scaleable.”
The co-founders initially started working with Australian banks to develop the product. They then worked on commercialising and soon “it went around the globe”, being picked up by institutions in the US and the UK.
“Then we started moving to telco and technology verticals,” Danhieux says.
“We started making the product usable for anyone writing software,” he adds.
Now, the startup works with 16 of the world’s top banks, including six in Australia, as well as technology companies including Atlassian and Salesforce.
It has doubled its headcount over the past year and now has around 50 staff members, which Danhieux expects will increase to 75 by the end of the year, and to more than 100 by next year.
Taking their time
Aside from the early angel investment, this is the first capital raise for Secure Code Warrior, and Danhieux says the startup was in no rush.
“We took a bit of time because we were growing fast,” he says.
“We didn’t need to raise money, we could grow organically with our own money.”
However, although they have had a team in the US for about a year, the founders felt it was time to “go a little bit quicker and scale up”.
Having seen the amount of potential for business in the US market, “we want to have the capacity and the resource in the team to be able to handle the scale”, Danhieux says.
The funding is pegged for expanding this US footprint, and for investment in R&D. There are also plans to further grow the business in the Asia Pacific region outside of Australia and New Zealand.
There are a lot of companies using developers in the likes of Singapore, Japan and China, and Danhieux predicts this is only going to grow.
“There’s enormous potential there,” he says.
“A dating process”
When considering a capital raise, Danhieux advises startups to take the time to get to know their investors.
“We came at the investment from a position of strength,” he says, and so “we have been able to be a bit picky”.
Having spent a year or so meeting investors for coffees, meetings and lunches, by the time the founders felt it was time for them to raise the funds, they already knew the investors.
Danhieux met a lot of investors in Silicon Valley, he says, and paid attention to the way they behaved, including how they spoke to their staff and waiters.
He wanted to know they had good business sense but also that they were “reasonable partners and people I could have a relationship with”.
It’s like “a dating process”, he says.
“You need to get to know each other before you get married in an investment,” he adds.
“I didn’t want to pick someone for the money and have an investor where it turns into a bad relationship.”
In AirTree and Paladin Capital, Secure Code Warrior found partners that could provide mentoring, coaching and advice, as well as funding, Danhieux says.
“We could have got more money or better terms somewhere else, but it’s not all about the money,” he adds.
“The best advice I can give is try to look for the personal connection with your VCs and your investors.”