Detectify raises €5M for its crowdsourced website vulnerability scanner

Sweden-based Detectify, which offers a website vulnerability scanner that is in part powered by the crowd, has raised €5 million in new funding. The round was led by New York-based venture capital and private equity firm, Insight Venture Partners. Existing investors, Paua Ventures and Inventure, also participated.

Founded in late 2013 by a self-described group of “white-hat hackers” from Sweden, the now 20-person strong company offers a website security tool that uses automation to scan websites for vulnerabilities to help customers (including developers) stay on top of security. The more unique part of the service, however, is that it is in part maintained — or, rather, kept up to date — via the crowd in the form of Detectify’s ethical hacker network.

This sees top-ranked security researchers submit vulnerabilities that are then built into the Detectify scanner and used in customers’ security tests. The really clever part is that researchers get paid every time their submitted module identifies a vulnerability on a customer’s website. In other words, incentives are always kept aligned, giving Detectify a potential advantage and greater scale compared to similar website security automation tools.

“Companies are building applications and users happily enter their data into these applications, but the applications are built from mix of technologies that are changing rapidly (open source, plugins, funky js-frameworks), without a clear vendor “responsible” for the security,” says Detectify co-founder and CEO Rickard Carlsson, explaining the problem the startup set out to solve.

“As no clear vendor is responsible for communicating about security [as compared to a Windows patch, for example], the knowledge sits in the community. We wanted to build a platform that takes the knowledge from white-hat and supercharges it with automation”.

Put more simply, developers typically have a long backlog of things to do and security testing often “falls between the cracks” because of limited time. It’s also near-impossible for any single developer to manually security test their code while keeping up with the latest vulnerabilities. By using automation, the wisdom of the crowd, and via integrations with popular developer tools, Detectify aims to help catch security issues before every new release and as part of a developer’s normal workflow.

To that end, Detectify already counts customers spanning a range of industries and company sizes, including Trello, Le Monde, and King. “It might have been easier to target a specific segment but we have a land and expand strategy. We also aim to make the internet a safer place, hence we want to offer our solution to organisations of all sizes,” says Carlsson.

Meanwhile, he does concede that automated vulnerability scanning tools aren’t new, but says one key difference is that the Detectify team comes from the world of ethical hacking instead of the world of compliance. “Our tool offers a great UI/UX, high-quality results and the latest security tests thanks to our crowdsourcing,” he adds.

Experian acquires UK’s ClearScore and its financial product matching engine for $385M

While credit-scoring behemoth Equifax continues to work through the fallout from its massive security breach, one of its big competitors is snapping up a startup in the UK to diversify its business. Experian today announced that it is acquiring ClearScore, which has built a platform that — like Experian — offers you a credit score, which it then uses it to suggest financial products like credit cards that fit the bill, so to speak. Experian is acquiring ClearScore for £275 million ($385 million), plus an unspecified earnout based on future performance. The deal is expected to close later this year.

Considering that ClearScore, which has around 6 million users, had only disclosed around $15.6 million in funding, this appears to be a significant return for its investors, which included Blenheim Chalcott, Brightbridge Ventures, Lead Edge Capital, and QED, according to PitchBook.

The deal is emblematic of a trend that we’ve been seeing in the world of financial services for some time now: legacy behemoths are buying up smaller and more nimble startups that have revisited and rebuilt age-old services, bringing them up to speed with our changing technological times. Those older and larger businesses are often opting to buy in new technology and talent rather than trying (and potentially) failing to do this within their own incumbent infrastructure.

In the case of ClearScore, while it provided a core service similar to Experian’s, it was doing so with the aim of appealing to a new set of younger and more digitally-savvy consumers.

ClearScore based a lot of its interactions around an app — on iPhone/iPad, Android and Apple Watch — and provided its credit score updates and financial ‘health check’ in real time and — this is important — free of charge, banking on the premise that if they could provide this one service better and cheaper than the legacy players, it would be enough to bring in more business through its recommendation engine. Services that it tailored to your own finances included credit cards, loans and car financing, and every time a user ends up purchasing one of those products, ClearScore gets an affiliate cut.

The model has been lucrative enough to have generated around $37 million in revenues in 2017, the company said, and ClearScore is on track to generate around $55 million this year. Experian said ClearScore will have an EBIT contribution of $20 million in 2019, and $25 million after that. Integration will cost Experian $20 million, the company said.

At a time when credit scoring agencies are in the spotlight — and not in a positive way — adding in services that make better use of the data that they are measuring anyway, and picking up a new user base to boot, seems to be a logical move.

“In acquiring ClearScore, we will take another important step in our strategy to extend the services we provide to UK consumers,” said Brian Cassin, CEO of Experian, in a statement. “Our goal is to provide more choice and greater convenience to individuals who want access to personal financial products at the best prices, while also making it easier for credit providers to offer better, more tailored offers to consumers. We look forward to welcoming the ClearScore team to Experian and to including the ClearScore brand as part of our broader offer.”

Experian plans to keep the ClearScore branding, and my guess — although the company has not stated it explicitly — is that we will see Experian looking to roll out ClearScore’s services and recommendation engine to a wider set of its current users, not just in the UK but further afield.

Five Seasons Ventures is a new €60M European early-stage fund investing in food and agriculture tech

More VC money sloshing around Europe, this time with the launch of a new early-stage fund targeting food and agriculture technology. Backed by the likes of European Investment Fund, Nestlé, Fondo Italiano d’Investimento, and Bpifrance, Five Seasons Ventures is announcing the first closing of its fund with commitments “in excess of €60 million” to invest in food/agtech in the region.

The France-headquartered VC says it plans to focus on early-stage companies developing tech innovations aimed at solving key challenges in the sector. These span healthier food, to shorter supply chains, to quantified and personalised nutrition, to alternative proteins.

Five Seasons Ventures is founded and managed by Ivan Farneti and Niccolò Manzon. Farneti is a seasoned VC and was previously a founding partner of Doughty Hanson Technology Ventures and a board member of Seedcamp. Niccolò meanwhile is said to bring quite a lot food and agtech investing experience. In his previous role leading a European family office, he’s previously backed 10 companies in the food tech sector, such as Impossible Foods, Perfect Day, Beyond Meat, Clear Labs and Memphis Meats.

In an email Q&A with the Five Seasons Ventures pair we delved a little into why Europe is crying out for a new early-stage fund dedicated to food and agtech, the new VC firm’s investment thesis, and how it hopes to find the next generation of entrepreneurs innovating in the food and agriculture industries. Full text below.

Why does Europe need a new “Food and Agri Tech” fund, and why now?

NM: The timing of our new fund is perfect, across the EU we are seeing a huge surge in innovation across the food and agri tech sector, due to numerous factors. The consumer mindset has shifted, people are becoming increasingly more conscious of what they eat and the wider impact that food has on their health and wellbeing. The cost of technology is lowering and there is a wider misalignment between the global demand and supply of food. Increasingly, we’re seeing larger incumbents acquiring early-stage companies.

We see many clear reasons for why it’s time to have an independent new European fund that can invest in these high-growth companies. There is a lot of innovation, entrepreneurs and startups growing in this space, and while we’re seeing incumbents are open to innovating outside of their own R&D labs by partnering with startups, there is a limited supply of specialised capital from experts in this area. We believe that Five Seasons Ventures can be the expert partner providing capital and value-add to help these companies scale.

In the area of “Food and Agri Tech”, does Europe have any particular strengths or weaknesses compared to other parts of the world, including Silicon Valley?

NM: Among its strengths, Europe is home to many of the most innovative food corporates, the biggest of which, Nestlé, has joined as one of the investors in our fund. There is less competition for capital, therefore lower valuations and more ‘frugal’ startups. European Universities are playing a key role in incubating food innovation, as an example the top agri tech University in the world is Wageningen University in the Netherlands. In addition to academic institutions, there has been a growing number of food and ag tech focused incubators and accelerator, with over 30 based across the continent. Europe has a culture and heritage in food and nutrition and non-dilutive funding is available from Horizon 2020 and Innovate UK, among others, to support companies at the earlier stages of development.

The areas where Europe is currently lacking are on the regulation side, but we are already seeing improvement in the EU with a simplified, quicker and cheaper Novel Food approval process . While it’s also been lacking in specialised funding, our fund is aiming to fill this gap, but we recognise that given the deal flow within the space, we could easily see further food tech funds develop in the future to further plug this gap. It’s an exciting time to work in food tech in Europe!

What stage companies are you planning to invest in, and what is your average size cheque?

NM: We’re investing at the Series A level into companies with high growth potential, a largely proven technology and early commercial traction. We will invest an initial €2-4m in exchange for a significant minority, ideally as part of a syndicate with other value-add investors. We will retain up to twice the amount invested in the entry round for follow-on investment and can fund up to €12m in each portfolio company.

Can you talk a little bit more about your investment thesis, what specific areas of food or agriculture pose the biggest investment opportunities?

IF: Over the past four years we have defined four initial investment themes, based on our analysis of the most pressing needs in the industry and the most promising startups and entrepreneurs. .

The first theme is “Shifting Diets”, where new technology is applied to changes in the consumer diet, this could be preferences for healthier, natural, and more sustainable food. Think of alternative sources of proteins, or solutions that lower the amount of sugar, salt or saturated fat in our diet or personalised nutrition aimed at making our lives better and healthier.

Secondly, we’re looking at “Trust and Transparency”.  Consumers are more interested than ever in where their food comes from, but big food companies and retailers are concerned about recalls, counterfeits and brand damage. Several digital technologies can be applied to shorten supply chains and make them more transparent.

“Food Waste Reduction” is another key theme. The amount of food that we are wasting, in supermarkets, restaurants, and on the production line, is huge and it’s a disgrace! More than a third of food made for human consumption never gets eaten. We’re already seeing several technology companies addressing this global issue throughout the supply chain, from the fields and distribution stages, to restaurants and at home.

Finally, a key theme is the “Increase of Food Production Yield” without an impact on environmental resources, where a lot of digital and biotechnologies are being applied to solve the growing misaligment between the demand and supply of food. We are very excited by the application of gene editing in agriculture as well as big data analytics and robotics, to name just a few.

What do you look for in founders and how important is domain expertise not just tech?

IF: We discovered that there is no shortage of technical and scientific talent in food and agri tech in Europe. But ambitious founders with a big vision for their business are harder to find. When we find the combination of both, maybe in Co-Founders, we normally get hooked and engage in deeper conversations. We expect more managerial talent to come out of big food and big agtech companies to join startups in the coming years, when current big mergers will lead the inevitable reorganisations.

How will you generate deal-flow, and what is the best way to pitch you?

IF: We have logged about 500 new food and agri tech deals in the last 18 months. We find many companies by attending specific industry events as speakers, panelists, mentors and judges, where we have the opportunity to explain what we are interested in and how we work as venture investors. Quality deal flow comes from our network of contacts in the industry and from generalist investors looking for the specialist’s point of view and our role as possible co-investors. Finally, we take a proactive view on specific themes and we scout the sector far and wide looking for the right company. We aim to respond to an entrepreneur’s email within a week, so a short mail with an exec summary is very efficient. We love to sample the products, wherever possible!

Revolut adds direct debits in Europe

Fintech startup Revolut is slowly making traditional bank accounts irrelevant. The company is adding direct debits in EUR to make it easier to pay for utilities and subscription services.

While Revolut is currently applying for a banking license, the company has already been adding everything you need to replace your bank account with a Revolut account.

The company started with an e-wallet in multiple currencies combined with a MasterCard . This way, you can upload money to your Revolut account in your local currency and then send and spend money in multiple currencies.

But when it comes to spending money, Revolut users have been limited to card payments so far. And yet, many countries ask you to pay your electricity or phone bill using direct debits.

Back in July 2017, Revolut gave you a personal IBAN in EUR and GBP. And now, you can hand your banking details to any subscription service in EUR so that they can debit your Revolut account directly.

And that’s about all you need to know. Revolut now has 1.5 million customers and many different services. You can buy travel insurance, phone insurance and cryptocurrencies through the Revolut app. Eventually, Revolut wants to become the financial hub on your phone.

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