As everyone has become increasingly focused on protecting themselves and their assets, more and more security companies are getting attention from venture capitalists. CoreStreet is the latest security company to receive venture funding. The Boston-based security company just pulled in a $4 million Series A round of funding from Pod Holding LP, a U.S.- and Nordic-focused $95 million fund.
CoreStreet’s security technology is based on validating credentials and the privileges associated with credentials. “Our vision is to make security ubiquitous, so someone can walk in a door and log on to a computer and a company can know it’s the same person. There are a lot of companies in the space, which shows people are paying attention. But many see us as partners, not competitors,” says CoreStreet’s President and co-founder Phil Liben. “Microsoft, RSA and Computer Associates need validation products. We can provide them with that functionality. Other than that, our customers would be the federal government and large financial services and health care companies.”
CoreStreet already has a partnership with RSA and counts a federal agency and commercial publisher as customers.
While CoreStreet is booking revenue, it is not profitable yet. Johan Pontin, founder of Pod Holding, says this could be CoreStreet’s first and only round, but that the scenario is unlikely. “They might not need anymore money. It all depends on the revenue ramp up, but I think it’s safe to assume they will need more financing and we would put more money into it,” Pontin says.
Liben, on the other hand, definitely wants to go for another round of private equity financing. “We will probably look for more money in 18 months. The plans are pretty flexible. It depends on the venture market and the economy. We could scale back and drive to profitability with what we have, but hopefully we won’t have to,” says Liben. He added that CoreStreet might be sitting pretty when it has to ask for its next round. “A lot of VCs were interested in this round, but we didn’t meet their requirements because we were too small, but they might be interested in participating in our B round.”
Liben’s plans calls for profitability in about two years from now.
The additional funds will be used for product and business development activities. The company touts 21 employees, but expects to double in size in the next 18 months.
CoreStreet was originally two small separate startups, both based on technology developed by Dr. Silvio Micali, a professor at Massachusett Institute of Technology. The two companies merged in August 2002 to become CoreStreet. Prior to round of funding, together the two firms had brought in $1.5 million from family and angel investors. To date, CoreStreet has 14 patents, which were developed by Micali.