Cyber start-up CipherStash which beats hackers to the punch raises $4.8m

CipherStash, which looks to encrypt a company’s data before a hacker can and try and sell access back to them, has raised funds for expansion in the US.

A start-up, which seeks to encrypt a company’s data before a hacker can break in, do the same and then sell that data back to the company, has raised nearly $4.8m.

CipherStash, a hybrid cybersecurity and encryption start-up with no home office and 16 staff, has raised the new capital in a seed round led by US venture capital firm Skip Capital.

Firms SixThirty Ventures and local venture capital fund AirTree, which is an existing investor, have also participated in this round.

The cybersecurity start-up has a different approach to most, explains chief executive Dan Draper, who said the focus goes directly to the data and not on protecting software applications or systems.

In the wake of mass cybersecurity breaches in Australia over the past couple of years, many firms have begun to classify data based on its importance and the damage that would occur if it was breached.

Mr Draper said with CipherStash, there was no need to do that as the only way to interact with data it had encrypted was via its systems.

“We want to stop data breaches from ever happening again, and so we do that by protecting data directly,” he said.

“The funny thing about most products or solutions that claim to protect data is they don’t actually protect data at all, what they do is they protect all the various different systems that the data is stored in a database or file system.”

CipherStash founder and chief executive Dan Draper. Picture: Supplied

One thing many companies failed to realise was that protecting systems or applications did not provide all-round protection of data, Mr Draper said.

“Data doesn’t stay in one place. In fact, it almost always will start in a database or go into a warehouse, but it will end up on somebody’s desktop in a spreadsheet,” he said.

“CipherStash uses an advanced form of encryption technology to directly protect data and so that means that if it moves around, or if it’s leaked unintentionally, the data is still protected.”

The start-ups method was more cost-effective than typical cybersecurity solutions, Mr Draper said. “If you consider traditional approaches, if you don’t encrypt the data, you’ve got to have a solution for every different possible place,” he said.

“We only need to support a handful of systems. If data ends up in another system and it’s not supported, it doesn’t matter because it’s still encrypted.”

CipherStash had recently begun working with a number of US companies, including banks, and it would look to use the new capital to help support a full expansion. It was also looking to hire a number of staff, recently hiring a marketing manager, a customer service manager and its first staff member in the US.

“We actually flipped up to the US very early and became a US incorporated business within the first six months of operation,” Mr Draper said. “Australia is a great test market, it’s a good place to sort of experiment. But the American market is where we want to be, and that’s the focus moving forward.”

Skip Capital Investment Partner Adam Cook said he believed CipherStash would become a leader in innovative cybersecurity solutions.

“Cybersecurity is a high priority for institutions across the board right now, and efficient, reliable digital defences are as important as ever. CipherStash is at the forefront of the industry,” he said.

Prior to founding CipherStash, Mr Draper had worked for talent company Expert360 as chief technological officer.

Originally published as Cyber start-up CipherStash which beats hackers to the punch raises $4.8m