May 25, 2005

Simplifying Security

Encrypting files for security purposes should get simpler with new algorithms developed by start-ups like Voltage Security.

By Andrew Madden

Company: Voltage Security

HQ: Palo Alto, CA

Founded: 2002

Management: Sathvik Krishnamurthy is president and CEO. Prior to joining Voltage, he was vice president of marketing and business development at ValiCert, a security software start-up, and he worked at Worldtalk Corp., where he was vice president and general manager of the security division. The founding Voltage team -- Rishi Kacker, Dr. Dan Boneh, Guido Appenzeller, and Matt Pauker -- developed the underlying technology as part of a research project at Stanford University.

Investors: On May 17, the company announced a $15 million Series C round of funding. JAFCO Ventures led the round, with participation from the Siemens Venture Capital arm of Siemens AG and existing investors Hummer Winblad Venture Partners, Morgenthaler Ventures, and Menlo Ventures.

Business Model: Voltage has developed a next-generation cryptography technique that simplifies the secure transmission of data, including emails, files, documents, and instant messages. Voltage's approach, known as identity-based encryption (IBE), is positioned as an improvement over public key infrastructure (PKI), which has never enjoyed wide popularity because of its complexity, implementation difficulties, and lack of standards. Voltage's algorithm, known as Boneh-Franklin IBE, simplifies the architecture for encrypting information by eliminating the need for certificates and complex infrastructure. The technology uses a common identity, such as an email address, as a public key, instead of long strings of numbers. Voltage sells its products to financial services, health-care, and pharmaceutical companies and the U.S. government.

Competitors: PGP Corporation, NetIQ

Dirt: Voltage has received lots of favorable attention for its technology, as well as its classic Silicon Valley pedigree. Any start-up that emerges from Stanford University seems to get a second look (ever heard of Google or Yahoo?). What's more, the company is backing up its promise with some results: Voltage claims it has averaged 60 percent quarter-to-quarter growth since launch in 2003 and boasts 25 new customers in the first quarter of 2005. It's also promising that Siemens, the German communications giant, has invested in Voltage. In February, the two companies announced that Siemens was testing Voltage's encryption technology with 10 of its customers. The test was designed to monitor email communications with smart phones. Since Siemens has joined the latest round of investment, it would appear that Voltage's technology passed the test.

Sources:

• Voltage Security
• What is identity-based encryption (IBE)?
• Keying in on PKI