Tyfone, the digital security startup that received a $5 million debt and equity investment from RPX Corp. (RPXC), is still seeking about $1.8 million in venture equity funding to allow it to develop its diverse patent portfolio into digital security products.
The Portland, Oregon-based company raised $6.6 million led by RPX and in-Q-Tel, an independent, not-for-profit organization created to bridge the gap between the technology needs of the U.S. Intelligence Community and emerging commercial innovation. In-Q-Tel has previously taken strategic investment in Tyfone and the money from RPX allowed that to be converted into equity.
Other investors included Steve Pawlowski, vice president of advanced computing solutions at Micron Technologies and a former senior fellow at Intel Corp., and retired General David Petraeus, who once was director of the Central Intelligence Agency.
Tyfone is in active discussions with potential investors to complete the additional c-round raise in the near future.
Tyfone also intends another round of venture funding in the next 12 to 18 months. It has raised a total of $16.6 million over its 11-year history.
The startup has spent that money developing decentralized software and hardware security solutions that help clients in industries like finance, healthcare, and government securely manage data and digital assets in the cloud. Its main product is hardware solution that can be placed on a credit card, a mobile phone or a computer to allow secure digital transactions.
The company is using the money to increase its marketing efforts and for new hires including a new CFO and a chief intellectual property counsel.
The company currently has 82 employees.
The company’s biggest customers include two of the top 10 largest credit unions.
Tyfone was co-founded 11 years ago by its Chairman Tom Spitzer, current CEO Siva Narendra and current COO Prabhakar Tadepalli.
Spitzer is a former managing principal of Summerville Advisors, a strategy consulting firm and a co-founder of M-Financial Group. Tadepalli was founder and CEO of Finatus, a venture-backed, web application outsourcing company.
Narendra previously was with Intel Laboratories specializing in energy and yield aware designs. He has authored over 60 technical papers in peer reviewed conferences and journals, and frequently lectures on technology forums.
Narendra also has more than 100 issued/pending patents and holds 5 divisional recognition awards from Intel and an award in 2003 for having 19 issued patents in that year.
In addition to Spitzer and Narendra, Tyfone’s board includes: Geoffrey Barker, a co-founder and executive at RPX; Dr. Rajesh Srivathsa, the managing partner of Ojas Venture Partners; Ashok Aram, the CEO for Deutsche Bank, MENA; R. “Ari” Arivazhagan, the senior general manager at Housing Development Finance Corp. Ltd.; and Prabhakar Tadepalli, Tyfone’s president and COO.
Narendra said in an interview that Tyfone wants to become “the Qualcomm of digital security.”
As such, he said it intends to sell its hardware and software digital security products as well as use its intellectual property to establish a digital security platform that can foster an ecosystem for other companies to license its patents to create the their own products and systems.
Tyfone is aiming to achieve revenue of $5 million in the fiscal year ended March 31, 2016.
The company is hoping to take advantage of the growing digital security solutions market.
According to the Center for Strategic and International Studies, global spending on cybersecurity topped $44 billion in 2013. Spending on cybersecurity is expected to near $80 billion in 2015, according to Gartner. Despite these increases, bulk loss of data and dollars continue to surge. In 2019, Juniper Research predicts cybercrime will cost $2 trillion annually.
Tyfone charges customers about 75 cents per customer for its software solution and about $3 per user for its software and hardware combination.
Narendra said that Tyfone has already been approached about a possible sale by a larger company, which he declined to identify and said Tyfone rejected.
“Our intention is to build up a business as a standalone company,” he said.
He said although Tyfone’s backers are certainly looking down the road for an exit strategy, it is too soon to speculate on whether Tyfone would pursue a sale or an IPO.
Tyfone’s most recent hires include a new CFO named Lyman Potts, who used to be chief operating officer of Elemental Technologies Inc. and a new in-house head of intellectual property.
Outside patent attorney Dana LeMoine, who has handled some of Tyfone's IP matters in the past, was brought in as chief intellectual property counsel responsible for all aspects of Tyfone’s IP.
LeMoine has 19 years of IP experience representing some of the largest IP holders in the world such as Motorola, Micron, and Intel, as well as many startups and emerging stage companies.
He also has prosecuted hundreds of patents to issuance, many of which are currently assigned to Tyfone. Having spent ten years in various design engineering roles, he also has extensive engineering experience in a diverse array of technologies including embedded systems, ASIC design, and satellite communications.
LeMoine’s hiring underscores the importance of IP at Tyfone.
“One of Tyfone’s key assets is its Intellectual Property,” the company says on its website. “We are proud of making inventions and patent filing a priority, both from the perspective of protecting our investments and from the perspective of promoting progress in science and useful arts.
Tyfone has a diverse portfolio of intellectual property including 100 issued/pending patents and over 750 issued invention claims.
Tyfone’s family of patents spans a wide range of topics, ranging from authentication to encryption and from provisioning to replacing passwords. Tyfone’s patents include filings in the United States of America, Taiwan, and Patent Cooperation Treaty countries.
—To reach the reporter responsible for this story please contact Dan Lonkevich at 707 318-7899 or at email@example.com