THEY are the frontline troops, sitting in a row behind their computer screens at the Cambridge offices of Joe Parry’s young cybersecurity venture.
It’s four years since the 47-year-old launched Cambridge Intelligence, which licenses software to detect data violations. Today, his 16 employees are tapping away in a battle to beat the hackers who use speed and skill to crack codes and infiltrate websites.
High-profile hacks such as that of adultery website Ashley Madison are keeping Parry on his toes — and his product in demand. “Each year we have doubled revenues and staff, and I can’t see any reason why that would stop,” he said.
Last year he opened an office in San Francisco to meet demand from American clients, who account for more than half of his customer base. Clients range from banks to law firms and include start-ups across many industries.
“There’s an enormous amount of investment being made in cybersecurity right now,” said Parry, whose company won a Queen’s Award for Enterprise in April. “In some cases big companies have set aside $1bn [£650m] for cybersecurity so there is definitely a drive to build on the capabilities of the smaller businesses. We have seen more and more start-ups in this area.”
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Parry is among a fast-growing group of entrepreneurs who have turned their attention to cyber-intelligence as companies tackle the threat of data breaches. Young ventures have been quick to make their mark in this rapidly expanding field, many of them armed with experts trained at GCHQ and MI5. Expert observers predict it won’t be long before the sector spawns its first world-leading company.
Examples of early success include two-year-old Darktrace, also based in Cambridge, which has won more than $40m in backing and a valuation of $100m. Money has come from investors including Hoxton Ventures and America’s Summit Partners as well as Autonomy founder Mike Lynch, to help the firm expand to 100 staff and 16 offices across the world.
“There were a lot of companies trying to build tall ‘walls’ around their online network and they just weren’t working. You can tell that by the amount of cyber-breaches we have seen in the past year,” said Nicole Eagan, chief executive at Darktrace, whose clients include Virgin Trains, Drax and BT. Its Cambridge headquarters is home to 60 staff while the rest are scattered around the globe.
The company’s “enterprise immune system” technology takes a different approach to what Eagan cites as more traditional — and perhaps outdated — defence mechanisms. “It works in the same way as our human immune system; it has a sense of who I am, my DNA, viruses I have previously been exposed to, and detects when I am under attack,” she said. “We are not going to say you are never going to catch the common cold but the idea is that we stop you dying from pneumonia.”
She added that, while the market has been flooded with new players, it is likely that good companies can secure a slice of the pie. “The reality is customers aren’t just selecting one product. It’s very different from your traditional enterprise software market — people are investing in multiple approaches because they feel it gives them better protection.”
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For obvious reasons the state has shown the sector its undivided support; this year David Cameron and other government officials have taken Britain’s promising cybersecurity start-ups on overseas trade missions to showcase the country’s burgeoning talent. Knowing too well they face fierce competition in America and Israel, the government has also appointed an ambassador for cybersecurity start- ups. In January it said Andy Williams, formerly of trade body Tech UK, would be based in Washington to help promote British companies in America.
Alastair Paterson’s company Digital Shadows is already making waves there. The four-year-old London business he founded with James Chappell set up a San Francisco base early on and now has investors throwing cash at it. “We’re being offered money but don’t need it right now,” said Paterson, 34, who has 42 staff and plans to employ another 20 within a year. He has recently hired people in Austin, Texas, and Chicago. “America is a key battleground,” he said.
The company, which has three of the world’s biggest banks as clients and is increasing revenues by 20% a month, has already raised $8m from backers including Passion Capital and Storm Ventures. They did not hesitate to take a slice of Paterson’s venture, which analyses a company’s digital footprint and the footprints of hackers. “We pick up tactics over time. Recently we saw the hackers weren’t just discussing a particular bank’s current online structure, but also the next version they were about to release,” he said. “When the bank moves to its new version the hackers will be ready to go.”
And it’s not just banks that are on the lookout for cyberattackers. Today customers come from across all industries, said Paterson. “Oil, pharmaceuticals and fashion, which I wasn’t expecting.”
Paterson did, however, point to one single issue that was inhibiting his company’s development — the difficulty it has finding talented staff. “We were looking for a data scientist for almost six months. If we had found one early on maybe we would be even further ahead and be creating more jobs,” he said. The struggle to find skilled workers is one reason Britain should keep strong ties with continental Europe, he added.
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As well as continental techies joining the country’s new ventures, Britain has attracted foreign entrepreneurs looking to create a cybersecurity giant.
At Cyber London (CyLon), Europe’s first accelerator for start-ups working in the intelligence sector, Grace Cassy has seen first hand the brains choosing Britain as the base from which to expand their businesses. “What surprised us in particular was how many of the founders were not British,” said Cassy, whose programme at CyLon offers three months of support and £5,000 to start-ups working on cyber- security products. Companies have access to mentoring and advice from industry experts and government officials.
“There are plenty of excellent accelerator programmes but the challenges of building a cybersecurity business are different,” she said. While Cassy is attracting talent to the capital, Britain’s skills in the digital security industry are by no means limited to London, she said. “A lot of the academic expertise is not in the capital. Cambridge, Oxford, Belfast and Southampton are all strong.”
For the emerging sector, the only way is up, she added. “We’ve got a heritage and track record in this area and research laboratories that have been working for many years. It is a hot sector but it’s only really been hot for the last year or so and a lot of investors haven’t felt hugely comfortable investing. That is changing.”