Deal Radar 2009: Confidela

As readers descended on TechCrunch last week, weighing in on the blog’s decision to publish confidential Twitter documents the microblogging service stored on Google Apps that were sent by a hacker to TechCrunch, Twitter users posted hundreds of tweets expressing their opinions and major media outlets joined the fray with stories that were variations on the same theme: how to ensure security in the cloud? Today’s Deal Radar company takes on that question. Confidela is a developer of document control, tracking and protection solutions. Founders Moti Rafalin and Noam Livnat, who worked in business development and product management positions, had incidents of potential clients or partners forwarding specs and restricted design materials of their coming products to competitors. They found that the existing digital rights management (DRM) solutions were expensive and had limitations that did not fit external sharing

The two began exploring the market and came up with a system that facilitates document sharing with a high level of security and control, allowing senders to restrict the way recipients view, edit, print or forward documents. Its flagship service, WatchDox™, was launched in public beta in June 2009. Confidela used a cloud-based encryption and data storage model as opposed the method in which the physical document resides at the recipients’ site and their backup environment. This way, all the documents sent securely reside at a safe third party location, with only the notification email directly being sent and residing on the recipient platform. The product requires no installation on either the sending or receiving platform unless the client desires Outlook integration. Further, the solution offers granular controls including the ability to change the document’s viewing, copying, printing, forwarding permissions at any time, or revoke them altogether. The company uses a subscription-based model with an individual Pro license priced at $15 a month, and business versions for company-wide or departmental deployment starting at $30 a month per seat.

The Mountain View, California-based company gained some early traction with customers in the semiconductor and manufacturing industry. Dune Networks and Novafora were early semiconductor customers. But the company feels that any business development interaction in which a non-disclosure agreement (NDA) is implemented is a potential interaction where WatchDox may be useful. The company recently announced its partnership with Box.net, a leading web-based content storage and collaboration solution adopted by both small businesses and Fortune 1000 companies. The company’s partnership and integration with Box.net makes WatchDox available to millions of Box.net users.

Since its launch, Confidela has a few thousands of users who have signed up and has just begun rolling out the paid premium services for these customers. Further, the company is working on new functionalities that will allow more collaboration, including bi-directional editing of documents. They also plan to introduce greater company-level control and compliance capabilities.

In a recent interview with Venture Capital Cafe, Rafalin said that if one understands WatchDox as a classic DRM solution, major enterprise software players such as EMC, Oracle, Adobe and Microsoft are competitors. In the sense that WatchDox is a virtual data room, secure workspace provider Intralinks is a competitor. Voltage competes with Confidela in providing tracking, protection and control for email attachments.

The company raised $5.5 million in a Series A from Gemini Israel Funds, which led the round together with the company’s first investor, Shlomo Kramer (who had founded Check Point Software). Since Confidela has only just begun selling their service, they felt that it was too early to forecast when they expect to be cash flow positive.

Interestingly, Confidela mentioned that they are modeling themselves after companies such as WebEx that offer SaaS service across all industries and have built effective low-touch sales operations. We can see why! On June 26, the company announced the inclusion of WebEx veteran David Berman on its board of directors. Berman, who at WebEx created and implemented the web-touch sales model that was key to the company’s hundredfold revenue growth and record profitability, will guide Confidela’s management team in introducing and advocating WatchDox.

Suggested Readings:
*Security Threats Escalating
*Trusting Untrusted Computers
*Saas: Webex & the Extended Enterprise

This segment is a part in the series : Deal Radar 2009