Monday, January 30, 2012

Startup Co3 Systems lands Series A round

By Rodney H. Brown

Stealthy data breach management startup Co3 Systems Inc. has taken in its first round of funding, just five months after launching. CEO John Bruce said the round, from Fairhaven Capital, was somewhere between $5 million and $10 million.

“Fairhaven led our first institutional round, our Series A round, and it is still an open round, Bruce said. The reason the round has been left open, he said, is that “we are getting interest from a number of parties, but I can’t go any further in that.”

On the Cambridge company’s website, Fairhaven is listed as funding the company in a news release from September. Also on the website is board member Peter Kuper, the director of InQTel, the investment arm of the CIA. Bruce said that InQTel was not an investor in the company’s Series A round, but did say, “We’re thrilled that folks over at InQTel are supportive of what we do.”

While other companies are focused on preventing a data breach, Co3 Systems is targeting what it says is the untouched market for getting companies back on their feet after a breach has occurred, working under the theory that such breaches will happen with greater frequency as time goes on. So the startup is offering a Software-as-a-Service product that will help a company establish what sort of compliance it needs to meet to get back in business as quickly as possible after a breach, then help that company execute on meeting those compliance needs.

“There is not a product to help a company deal with this reality of losing data,” said Ted Julian, chief marketing officer and a co-founder of Arbor Networks.

In fact, the executive team at Co3 has been pulled together from a wide variety of well known networking and security companies. Julian spent the last 12 years as vice president of marketing at Application Security, a data security company he co-founded. Bruce came to Co3 from his role as chairman and CEO of Quickcomm, and prior to that was president and CEO of Authentica until it was sold to EMC Corp.

Both Bruce and Julian were touting their most recent hire, Gant Redmon, who serves as general counsel and vice president of business development. Redmon has both Arbor Networks and Authentica in his background.

Redmon described how Co3 plans to help companies meet their data loss compliance requirements this way: “The difference between doing this all by yourself and doing it with a product like ours is like the difference between trying to put together a puzzle and trying to put together a puzzle where all the pieces have been turned over.”

Being less than six months old, the company has “about three dozen” clients in pilot testing of its software product, but no paying customers as of yet. Those testing it out are doing so under a three-month trial period, so Julian pointed out, “We are just now coming up on people having the opportunity to convert to paying customers.”

Co3 Systems has plans for growth this year, starting with moving at the end of last week to space near Alewife in Cambridge that is double its previous space. By the end of 2012, Bruce said he expects to have approximately 20 employees in the new headquarters, which could handle up to about 45 people, he said. He plans to grow the company “cautiously” but believes there is a huge market potential out there for Co3’s offerings.

“If there are tens of billions of dollars for the market pre-incident, there has to be a huge opportunity post-incident,” he said.