GCHQ-backed startups tell UK government: give cyber the fintech treatment

The second tranche of GCHQ-selected infosec startups has told the government that Britain should emulate the model it applied to encouraging the growth of homegrown fintech startups to cyber security.

Launched at the headquarters of the National Cyber Security Centre (NCSC) in Victoria, London last night, a group of startups that were selected to take part in the GCHQ-backed accelerator mingled with minister for the department of culture, media and sport (DCMS), Matt Hancock, and reflected that the UK's success in home-grown fintech should be repeated for security.

Gary Stewart, director at Wayra UK and Telefónica open future in the UK, said: "Before we started the session the minister asked the startups: is the program actually working? What can we change? What can we do more of to help you?

"They all said kind of the same thing. They said just in the same way the UK decided it wanted to be a leader in fintech, and changed the ecosystem so that became a reality, we should be able to do the same thing in cybersecurity. And that is what we're trying to do now."

The last couple of budgets have made a great song and dance of British investment in cyber security – and DCMS minister Hancock was quick to highlight the government's commitment to putting a "very large budget behind it. [That's a] mission critical part of our national security. We have also stated it is a tier-one national security issue."

Meet the startups

This is the second round of the joint GCHQ and Wayra accelerator programme, and the first time some of the startups will be hosted at the NCSC's location in Victoria, rather than behind the wire at GCHQ's headquarters in Cheltenham. The first cohorts raised £3 million in funding in total following the launch of the scheme in April this year.

The nine startups include a business that tracks the illicit trading of cryptocurrencies such as bitcoin called Elliptic, a software-as-a-service learning platform designed to help developers write secure code called Secure Code Warrior, and ExactTrak, that provides tracking technology integrated at the chip level and counts AMD as a customer.

The other startups are Cybershield, Intruder, Ioetec, RazorSecure, Trust Elevate, and Warden, spanning spearphishing prevention, through to age verification for young adults and children online.

Wayra director Gary Stewart said that although the UK ranks an admirable third in worldwide cybersecurity investment, the NCSC and Wayra believe "we can do even better". The project is unique in that it is an open partnership with the secret services.

"The UK is a very dynamic market and generally, globally speaking, there are a lot of increasing investments in cyber security," Stewart said. "But the problem is a lot of that is still being done in the United States – if you look at it by number of funding deals, it seems to be something pretty much dominated in terms of cyber security in the United States. If you look at it in terms of funding dollars, same story – basically the US dominates."

The ranking currently goes, in descending order, the United States, Israel, the UK, and China.

"The idea is that the UK and other countries are increasingly making their mark, and we think that over time the UK and these other countries will increasingly become more and more relevant," Stewart said. "If you look around you'll see that there are increasingly more and more startups that are developing significant traction from the UK ecosystem. These are companies like Digital Shadows and Darktrace.

"If you look at Darktrace, for example, you see that recently they raised a $75 million round at an $825 million valuation, so that shows that things are happening and that you don't, if you are a great British entrepreneur, have to say ‘OK the only place I can go to is the United States'."

What's in it for Telefonica?

Meanwhile, the programme backer Telefonica said the programme was part of a long-term profit-making strategy, to offset the costs of providing increasingly complex connectivity.

"Well it's really simple, we're doing it for money," Stewart said. "We see that just by selling connectivity over time, the prices are going down. So even though more and more people are buying connectivity over time, we are seeing that our revenue is flattening or going down. So we need to find new areas of growth for our business."

This programme is, for Telefonica, "really about trying to find new lines of business for our company going forward, and cyber security is one of those areas we already identified as strategically important to us," Stewart added. "In fact, of all the new digital lines of business we have started on recently, cyber security is the one that's growing the fastest, not only in Europe but also America."

He closed by repeating, again, that the goal should be to mirror the UK's success in fintech, and that this goal is in sight with the collaboration of government, startups and the corporate sectors to find "win-win solutions to help these startups grow and scale."

And what became of the participants from the first three-month accelerator?

In addition to raising about £3 million in capital, of the seven companies involved, two gained contracts with GCHQ and another two contracts with Cisco. "This shows companies are actively looking to work with startups," Stewart said.


Copyright © 2017 IDG Communications, Inc.

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