Adelaide-based startup Memory Box Backup has revealed it is seeking to raise $1.5 million in capital to take its technology onto the world stage, and believes it has the potential to list on the Australian Stock Exchange.

The company has created technology that allows users to securely backup their data by encrypting it and replicating it across other users’ PCs.

The capital raising — which Memory Box hopes to undertake through the Australian Small Scale Offerings Board in parcels of $35,000 — will allow the company to finalise its retail product offering for distribution through specialist IT resellers and retailers, according to managing director Trevor Glen, as well as fund further market research and ongoing software development.

Memory Box has been around for several years, and has already won several rounds of funding — tier 1 and tier 2 funding from the Federal Government’s COMET program, as well as $90,000 worth of investment from local angel contributors.

In addition, it has attracted only 200 users to its service over the past several years — each of which pays just $8 a month or less to access the backup service.

Glen admitted the company’s development cycle has been slow, and says in hindsight the company could have been more iterative with its product — releasing quickly to the market in early versions and then continuing development.

“Engineers struggle with the idea of releasing something which is not quite complete,” he said.

However, he added the company’s technology was quite complex behind the scenes, and said that part of the slow ramp-up has been making sure the company wasn’t annoying customers — getting the technology right before attempting to expand.

“Current revenues are not much at the moment, but that’s expected given where we are in the commercialisation lifecycle,” he said. “The main reason that we are looking at funding is that we believe that the window of opportunity is relatively narrow and the funds will help us attack the market with sufficient funds to make it happen quicker than if we’d tried to do it out of cashflow.”

Memory Box has some senior advisory talent on board and more on the way — it has been working with Adelaide marketing and commercialisation company Fit 4 Market for over three years. And it has recently taken Philip Vafiadis, the chief executive of audio and loudspeaker manufacturer VAF Research, on as a shareholder and board advisor.

“He also has key contacts across the world and is helping us negotiate with another potential board advisor in the US who will provide an important advocate and advisor in the US market,” said Glen.

Video credit: Memory Box

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1. Carbonite Australia
   Posted 31/08/2010 at 9:49 am | Permalink | Reply

   I think its great that an Australian company is trying to compete in this space but 200 customers paying $8 per month isn’t going to pay anyone’s bills for a while. I know first hand what it took to get Carbonite off the ground in Australia and that is off the back of a US success story.

   It takes mass marketing and big relationships (ISP level). If you look at what carbontie did in the US, they went retail. Didn’t worry about the middle man because the margins are so low that its hard to give money away with $8 per month. It worked but they had to spend big. The middle man came along but it wasn’t the prime distribution strategy.

   Replicating that success in Australia isn’t going to be easy.

   Good luck guys.

   • Renai LeMay
     Posted 31/08/2010 at 11:09 am | Permalink | Reply

     That’s the way I feel about it as well — I was kinda shocked to find out that Memory Box only had 200 customers. They really need to get stuck into the viral marketing in a big way at the moment an develop some more customers; that will make their story that much more powerful when they eventually do attract more funding.

     At the moment what they have to show (and I’m not being negative here, I love the technology and the guys are great) is a cash burn that has already lasted several years and a development effort that has only attracted a few customers.

     • Trevor Glen
       Posted 31/08/2010 at 12:40 pm | Permalink | Reply

       Fair points, Renai.

       Our concern about pushing something that wasn’t ready is that we aren’t talking about someone’s thow-away information here: Memory Box is about protecting those irreplaceable files. How would you feel about loosing the photos of your kids? Or the document you’ve been working on for weeks. It just has to work.

       Where we are at now is really the beginning of the journey. We have some partnerships in the pipeline to help with this push and this funding is predominantly a sales and marketing effort.

       I’d like more than 200 users too, and encourage all Delimiter readers to trial the software on our website. We also have a beta program too: http://www.memoryboxbackup.com/beta.

       Regards,
       Trev

   • Trevor Glen
     Posted 31/08/2010 at 12:28 pm | Permalink | Reply

     Hi Carbonite!

     Thanks for the comment, glad to see your input!

     I agree that traditional online backup services will struggle to replicate the US successes in Australia. But, that’s where our offering is different. We don’t have the data centre infrastructure that we need to fund, and our technology supports rolling Memory Box out within an internal network (whether that be an enterprise LAN, or an ISP).

     This does mean that we have margins and our marketing strategy is about building up a number of key relationships to make the most of that margin.

     Thanks for the well wishes. I too wish you well: everyone should consider online backup and Carbonite has done a great job leading the market.

     Regards,
     Trev

2. Chad
   Posted 31/08/2010 at 10:35 am | Permalink | Reply

   “The company has created technology that allows users to securely backup their data by encrypting it and replicating it across other users’ PCs.”

   This doesn’t sit well with me. What if you need to restore a file the there are no available peers with some of the chunks?

   • Trevor Glen
     Posted 31/08/2010 at 12:33 pm | Permalink | Reply

     Hi Chad,

     Thanks for the comments. Our network controller that sits in the middle of the Memory Box network can be distilled to 2 main functions:

     1. Ensure that the data goes to the best possible place when backing up.
     2. Constantly monitor the network to ensure that your data is as available as it can be by moving pieces around.

     We also provide some “seeding hosts” to help for both 1 and 2 above.

     Finally, the redundancy we add to the files when you backup means that we only need a little over half of the file “chunks” to be able to recover the full file: and it doesn’t matter which packets they are.

     Regards,
     Trev

3. Chad
   Posted 31/08/2010 at 10:47 am | Permalink | Reply

   Also, as I’m sure the MB guys will probably read the comments, over on ZDNet someone mentioned an invalid SSL certificate (and I can’t comment there w/o making an account) – that’s not quite correct but you are referencing non SSL assets from your payment page, as such the browser doesn’t display all the usual SSL security signs (it may in-fact warn the user of non-secure elements).

   The BC platform is sllooooowww as well.

   • Trevor Glen
     Posted 31/08/2010 at 12:41 pm | Permalink | Reply

     Ahhh, right. We’ll fix that, thanks Chad.

     Yes, BC is running slow today. :(

4. Darryl Adams
   Posted 31/08/2010 at 2:30 pm | Permalink | Reply

   The problem with cloud backup imho is the bandwidth cap. I use both jungle disk and the iinet cloud backup. The iinet solution is not as good as it lacks the fine control jungle disk and carbonite has, but with the service not counting for bandwidth, it more afordable for me.

   And this is an insidious reverse net neutrality argument. Use our service and it does not impact the cap. The same with Fetch TV.

5. Carbonite Australia
   Posted 01/09/2010 at 11:10 am | Permalink | Reply

   There is a place for all forms of backup in Australia. The challenge remains beyond the people who actually understand the risk of losing data as to how to educate them. Most mum and dad’s just don’t know they need to backup. it takes a disaster to teach them a lesson and a bill from a PC repair guy/gal.

   The more talk about the cloud there is the more people’s comfort zone will broaden and online backup will become part of the discussion.

   We still get lots of people calling us asking how does it work and how safe is it? For some reason when they buy the hard drisk from DSE they accept that it will work fine and forever.

   Any way its a challenge and my opinion is that in Australia education is the key. Be the prime educator and by default you will also be leader.

6. prepaidplans
   Posted 05/09/2010 at 8:36 am | Permalink | Reply

   If you are in business then I think online backup is a must. Personally, the technology talked about i this article is interesting but to an every day consumer telling them that their data will be shared amongst other (securely) is a little scary to say the least. I think Memory Box needs to target the more sophisticated PC users not the every day mum and dad (which is where Carbonite is). A more sophisticated user will understand the technology and the difference Memory Box is offering.