Home / Cybersecurity / Cybersecurity startup CryptoMove raises $6 million in Series A … – Business Insider

Cybersecurity startup CryptoMove raises $6 million in Series A … – Business Insider


cryptomove copy
Boris Burshteyn, left, and
his son, Mike, the chief technology officer and CEO,
respectively, of CyptoMove at the cybersecurity company’s office
in the Hero City coworking space in San Mateo, California. The
company plans to move to a larger office in the next few
weeks.

CryptoMove

  • CryptoMove, a cybersecurity startup led by a
    father-and-son team, just raised $6 million in a Series A
    funding round.
  • The round was led by Social Capital, a venture capital
    firm founded by ex-Facebook executive Chamath
    Palihapitiya. 
  • Social Capital was intrigued by CryptoMove’s approach
    to security, which protects corporate data in part by keeping
    it in frequent motion, playing a kind of game of digital
    hide-and-seek with potential hackers. 

In 2017, venture capitalists
invested more than $7.6 billion
into cybersecurity startups,
helping flood the marketplace with an assortment of new software
built to prevent malicious attacks before they happen — or fix
them once they do. 

Although CryptoMove was one of those cybersecurity startups that
got funded last year, Mike Burshteyn, its CEO, doesn’t consider
his firm to just be part of the pack. CryptoMove’s technology is
superior to that of other cybersecurity companies and could
change the way cybersecurity is done forever, he said.

“It’s certainly a crowded space,” Burshteyn said. “I don’t think
there’s any question that security is overfunded. But we have no
control over the timing of our invention.”

While CryptoMove’s name might make it sound like it’s yet
another cryptocurrency startup, the company’s technology has
nothing to do with bitcoins or blockchains. Instead its system is
designed to secure companies’ data.

CyptoMove’s system breaks up data into small pieces and puts it
into containers that are like rows of virtual vaults, Burshteyn
said. Each vault contains a different piece of the data puzzle,
and the system keeps the vaults moving at all times, rather than
letting the data just sit in one place. Together, the techniques
help keep data secure by making it difficult for the bad guys to
figure out how to break in and steal the information. 

The company’s software can run both on servers in corporate data
centers and also on public cloud services.

‘It’s a father-son team, which traditionally, VCs get
pretty scared of’

Founded in 2015, CryptoMove emerged from stealth mode and
launched its product last year. Now, just a few months later,
it’s announcing that it’s closed a $6 million series A funding
round at the end of last year that was led by Social Capital, the
venture capital firm
started by Chamath Palihapitiya
, an early Facebook
executive. Burshteyn plans to use the money to help grow
CryptoMove from a scrappy 11-employee startup into a thriving
software company. 

But CyptoMove has already gone a long way from its
beginnings. 

The company got its start when Boris Burshteyn, Mike’s dad,
recruited him to launch a business based on a security idea he’d
been developing for a few years.

At the time, Burshteyn was working as an attorney, counseling
large tech clients including Amazon and Google on how to handle
cybercrime and data breaches. His dad, meanwhile, had had a long
career as an engineer, including stints at Oracle and Cisco.
Boris’ experience helped inspire his idea for securing data; he
brought it to Mike once it became clear to him that the idea had
market potential. 

“My dad needed a business partner — it’s pretty much that
simple,” said Mike Burshteyn.

It was this partnership that made Arjun Sethi, a partner at
Social Capital, look more closely at the company.

“It’s a father-son team, which traditionally, VCs get pretty
scared of,” Sethi said. “But we saw that they could work together
for so long and build this type of product, so we decided we
should take a deeper look.”

CryptoMove already has some big, notable clients

Today, CryptoMove is a growing business with clients including
the US Department of Homeland Security, and French bank BNP
Paribas. 

Though many of CryptoMove’s clients are hesitant to say publicly
that they’re using its technology – as Burshteyn puts it,
“you wouldn’t necessarily want to advertise the type of lock
on your house” — client testimonials were a big part of
CryptoMove’s fundraising strategy. 

For Sethi, really seeing how the product worked made a big impact
in his decision to invest in the company.

“It’s pretty elegant in theory, but it’s really hard to execute,”
Sethi said of CryptoMove’s approach to security. “It’s not a
typical cybersecurity solution like everyone else, with a
marketing engine behind the same product. It’s a product that has
a very specific value proposition that a lot of people haven’t
seen before.” 

CryptoMove was excited to have Social Capital on board as
an investor

Though CryptoMove raised $6 million, the funding round was
oversubscribed, meaning investors collectively wanted to purchase
a larger stake in the company than it wanted to sell. So the
company had some control over which investors it decided to take
on board.

Burshteyn said he was encouraged by Social Capital’s work with
Netskope, a cloud security company. Social Capital led the
company’s $5 million Series A round in 2013. 

“We were looking for a top-tier firm to come in, lead the round,
and help us take our business to the next level,” Burshteyn said.
“Social Capital was very deep on the space. They got deeper
on the business side and technically than other firms.”

In addition to Netskope, Social Capital has backed other
enterprise companies including Box, Slack, and SurveyMonkey. The
firm made waves in recent months by using algorithms rather than
in-person meetings to help it decide which companies to back in
early funding rounds. The firm believes the algorithm-based
technique will help move funding to founders who might otherwise
be discriminated against.

But Social Capital didn’t need its algorithms to convince it to
invest in CryptoMove. Instead, the firm’s team met with the
company on multiple occasions, at different stages of its growth.

Burshteyn said he wouldn’t have it any other way. Social
Capital’s hands-on and “team-based” approach was a big factor for
him in deciding to work with the firm. 

“They were helpful before the round even closed so we saw a lot
of value,” he said. “They have started moving the needle for
us.”


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